Nelson, 19, was loaned out to the Bundesliga side at the start of the season after penning a new deal with the Gunners last August.
The versatile forward managed six goals in his first seven league appearances for Julian Nagelsmann's side but has featured in just four matches in 2019.
Having made brief substitute appearances in Hoffenheim's recent fixtures against RB Leipzig and Eintracht Frankfurt, Nelson was left out of the matchday squad for Die Kraichgauer's 2-1 win over Nurnberg, with Nagelsmann confirming after the match that this was an "educational measure" rather than an injury issue.
Nelson’s early season form in the Bundesliga generated a lot of excitement and led to his first England Under-21 call-up last October, where he managed two goals in his first two appearances.
There were even reports of a potential call-up to the England senior set-up, with Gareth Southgate said to have been considering naming Nelson in the Three Lions’ squad to face the U.S. national team and Croatia last November.
Southgate offered encouragement to Nelson at the time and suggested that he would be next in line for a call-up to the England squad if he continued his good form in Germany.
“We really like Reiss,” Southgate said in November. “He is doing okay with Hoffenheim.
“We think that he and some other players in the Under-21s have got big futures.
“He always impressed me in the match time he got at Arsenal. He always had a really good impact whenever he played.
“I always liked his personality on the field and he is one of a number of attacking players who will push for places in the coming years.”
Nelson’s good friend and fellow countryman Jadon Sancho has established himself as a Bundesliga regular with Borussia Dortmund and it was hoped that Nelson would be able to have a similar impact after such a promising start to his time in Germany.
However, his spell with Hoffenheim appears to be petering out, with Bundesliga rivals RB Leipzig already being linked with a swoop for Nelson ahead of next season.
Hoffenheim are currently eighth in the Bundesliga and Nelson will be hoping for a return to the squad when Nagelsmann’s side face Stuttgart on Saturday.