Schlupp has been on the sidelines for the Eagles since suffering an ankle injury in the 2-0 win over Huddersfield Town on March 17.
The left-back will not be available for Palace's clash with Brighton & Hove Albion on Saturday, but Hodgson has confirmed that the 25-year-old is nearing a return.
"He is not too far away from coming back, which will give me another option. He is closer to the team than we thought he should have been," Hodgson told reporters.
"It was a nasty injury he picked up at Huddersfield, but already he is showing signs of being back on the field. But it is in the hands of the medical staff."
Palace are currently 17th in the Premier League table - three points clear of the relegation zone.