Olsen was placed on injured reserve after suffering a broken foot during a Week 2 win over the Buffalo Bills. He missed the past eight games while in rehab, but on Monday, the team turned in paperwork to the league to have him reinstated.
Coach Ron Rivera said Olsen had a good week of practice, doing everything he has been asked "and then some."
"It's exciting," Rivera said. "He's obviously a part of what we do. We haven't had him for a while. We feel good about getting him back at this time, especially going into this final stretch of the season."
The Panthers (7-3) are trying to keep pace with the New Orleans Saints (8-2) in the NFC South. They face the Saints, who have won eight straight since a 0-2 start, next week in New Orleans.
Center Ryan Kalil is listed as questionable for Sunday with a neck injury, but Rivera would like to get the five-time Pro Bowl selection some snaps against the Jets if possible.
Quarterback Cam Newton, who was listed as limited all week with a thumb injury, had a full practice Friday and will not have an injury status for the 1 p.m. ET game.
Rivera said he doesn't want to rush Olsen back to playing every snap right off the bat against the Jets.
"We're going to try to do it judiciously, save him from himself and save him from us," Rivera said. "You get a guy like that, you want to keep him out there as much as you can.
"Just knowing his conditioning and football shape isn't where it needs to be right now, [you don't want to overdo it]."
Olsen last season became the first tight end in NFL history to have three consecutive 1,000-yard receiving seasons. With 7,393 career receiving yards, he is 19 yards shy of former Philadelphia Eagles star Pete Retzlaff (1956-66) for seventh place on the NFL's career yardage list for tight ends.
Nobody is more excited about Olsen's return than Newton. He said earlier in the week that Olsen brings a "calming presence" to the offense.
"Not that anything has been a lack of production in that tight end room with his absence," Newton said. "Greg is just a pro's pro. With the addition of him, as well as Ryan, it's just an extra piece to the puzzle that we've been long missing."
Kalil suffered a neck injury prior to the season's second game and has been inactive for eight of the past nine games. He returned to start in Week 7 at Chicago but reinjured his neck in the first half and hasn't played in the past three games.
Because of that setback, Rivera would like to ease Kalil back into the rotation. Much will depend on the health of backup center Tyler Larsen, who has been limited in practice all week with a foot injury and also is listed as questionable.
Rivera is optimistic Larsen can play Sunday. So the Panthers could go with a combination of Larsen and Kalil against the Jets.
"You want to build it up gradually," Rivera said. "That's the thing we've got to be smart about with Greg too. You don't want to throw him out there and have him go 60 plays. So we really have to be smart."
Nickelback Captain Munnerlyn was ruled out Saturday after missing practice all week with an illness. Without Munnerlyn, the Panthers will use a combination of other cornerbacks or linebacker Shaq Thompson to fill the nickelback role.