For the Foxes, the competition brought them to within inches of domestic success last season as Brendan Rodgers' side made it to the semi-finals only to experience last-minute heartbreak in the second leg as they fell to defeat to Aston Villa.
Arsenal meanwhile could only go as far as the last 16 of the tournament last year, losing out on penalties to Liverpool after a thrilling 5-5 draw in normal time.
The winner of this tie will go on to play the winners of the Lincoln City vs Liverpool tie next week.
With a difficult away trip to Manchester City in the league on Sunday, it is expected that Leicester are likely to ring the changes on Wednesday night.
Cup expert Danny Ward is likely to get his first taste of action this season as well as youngster Kiernan Dewsbury-Hall and Demarai Gray, who knows that only a good performance will force him back into Rodgers' plans.
The Gunners are also expected to make changes to their side which could see the outcasted Mesut Ozil included after not featuring in any of Arsenal's match-day squads so far this season.
Arsenal's hero in their win against West Ham on Saturday Eddie Nketiah is likely to lead the line from the start alongside fellow academy graduate Joe Willock. The highly-rated William Saliba could make his debut at the King Power Stadium.
Leicester City: Ward; Castagne, Morgan, Soyuncu, Thomas; Mendy, Dewsbury-Hall, Maddison; Albrighton, Iheanacho, Gray.
Arsenal: Macey; Cedric, Saliba, Luiz, Holding, Kolasinac; Elneny, Guendouzi; Pepe, Nketiah, Saka.
It was only a short while ago that the two teams faced each other back in July as Jamie Vardy rescued a point for Leicester at the Emirates Stadium.
Pierre-Emerick Aubameyang opened the scoring just after the 20-minute mark to score his 20th league goal of the season and set Arsenal on their way to a fifth successive victory.
Arteta's side however were dealt a major blow 15 minutes from time when Eddie Nketiah was sent off for a high challenge on James Justin before Vardy latched onto the end of Gray's low-driven cross in the 84th minutes to ensure the Foxes would return to the East Midlands with a point to their name.
Ones to Watch
Leicester's academy has been one to boast about in recent years and the next bright talent to come through has just as much promise as the rest.
Kiernan Dewsbury-Hall was arguably one of the standout players during pre-season for the first-team and with Rodgers wanting him to gain more experience on the pitch, the Carabao Cup seems like a perfect opportunity for him to prove his worth and stake a claim for a more regular role.
Bukayo Saka made his name last season after becoming one of the star players in the Arsenal side and could be the source of inspiration to guide the Gunners to the next round.
His ability to play in any position on the pitch comfortably makes him an exciting talent and now wearing the number seven shirt this season, his importance to Mikel Arteta's plans is increasing with each game.
Speaking to www.lcfc.com in the week, Leicester boss Brendan Rodgers discussed the importance of his young squad moving on from their semi-final heartbreak last season.
He said: "I think that was disappointing for us because I thought, over the two games, we were the better team, but we didn't qualify, so that was a competition that hurt us last year.
"But you have to feel that pain in order to improve and progress, so it's a game that we'll give everything [in] to get into the next round."
Arsenal manager Mikel Arteta spoke to www.arsenal.com in regards to Eddie Nketiah following his goal-winning exploits against West Ham and how it will help his confidence.
Arteta said: "It's so important for him and for the team as well. It's a clear message for everybody on the bench, that they have a clear mission when they come on.
"Whether it's one minute or 45 minutes, they come on to help the team and today Eddie was massively important. He did his job really well."
How to Watch
The game kicks off at 19:45 on Wednesday 23rd September, however it is not available to watch on TV.