The England midfielder has been out of action since returning from international duty as he managed a minor fitness problem.
Hornets boss Gracia revealed the 23-year-old, who fought his way back from a serious knee problem which sidelined him for most of last season, had been able to train ahead of the trip to St James' Park.
Gracia revealed that Chalobah has been making good progress in recent weeks.
"He was disappointed after he came back from national because he felt a little pain and last week he wasn't available," he said.
"This week he has trained with the team and is fit and ready to play. We have lots of good players and Chalobah is one of them."
Forward Troy Deeney has missed the past two matches because of a hamstring problem and remains doubtful.