The Denmark international has been out for a month after breaking his hand in the Foxes' goalless Champions League draw in Copenhagen.
Replacement Ron-Robert Zieler has conceded 16 goals in eight games and has kept just one clean sheet to leave Leicester two points above the Premier League relegation zone
Schmeichel, who was also missing with a hernia problem earlier in the season, was due to be out for up to six weeks but is training and has rejoined the goalkeepers after previously working as an outfield player.
Leicester have won just one point in three league games since his hand injury a nd, as they head to bottom-of-the-table Sunderland on Saturday, Ranieri is keen to see the goalkeeper fit again
He said: "I hope before Christmas Day he'll be ready
It depends on him and the surgeon but his fitness is getting better
He is working on a normal training session, separately.
"I shake his hand and he always gives me his left hand but today I said give me his right and shook it - gently - not like (Marcin) Wasilewski."
Ranieri could have Nampalys Mendy in his squad at the Stadium of Light after the midfielder finally shook off an ankle injury which has sidelined him since August
He suffered the injury on his full debut against Arsenal but may make the bench along with fellow ankle injury victim Ben Chilwell
"Everybody's available and they trained very well
It's an important match for them and us and we are ready," said Ranieri
"Mendy and Chilwell are back training with the first team and they are available
Of course they don't have 90 minutes under them but are okay."
Meanwhile, Ranieri refused to be drawn on links to Genk midfielder Wilfred Ndidi, despite reports suggesting the champions are close to a Â£14million deal
"I can tell you it's only speculation and I don't talk about players coming in or going out
I'm sorry, I don't speak, I'm only a coach," he added
Source : PA