Williams missed recent defeats to Munster and Connacht due to injury but hands the Blues a significant boost for the all-important Guinness PRO14 encounter.
With his return to fitness, George Earle drops to the bench and Seb Davies reverts to the second-row.
The other changes come in the backs with Lloyd Williams given the nod at scrum-half and Jarrod Evans at fly-half. Gareth Anscombe, who joins the Ospreys next season, switches to full-back in what could be his final game for the Blues. Elsewhere, Aled Summerhill is back to take his place on the wing in the place of Jason Harries.
Tighthead prop, Dillon Lewis, retains the number three jersey as he is set to hit a half century of appearances for his home region.
Head coach Mulvihill said: “It is great to have Nick back to lead the team on Saturday. He is such an important player to our group, who leads by example, galvanises the team and gets us over the gain-line.
“I have no doubts over Gareth’s commitment. He is the consummate professional and is hugely competitive. He has had a great season here at Cardiff Blues and will want to go out on a high.
“It’s also great to see Dillon Lewis making his 50th appearance for the region. He’s had an outstanding season for both Cardiff Blues and Wales and is someone who I’ve got a lot of time for.
“It’s always fantastic to have another young, local boy hitting an important milestone in his career and it’s a real credit to the pathway and academy system throughout the region.
“We have had a great couple of weeks of preparation and the boys a highly motivated to claim a fifth derby win of the season, especially after losing at the Liberty Stadium in January.”
Wales’ Capital Region are currently one-point adrift of the Ospreys, who sit fourth in Conference A, which secures a play-off for a place in the Heineken Champions Cup.
That play-off fixture is likely to be at Cardiff Arms Park, should the Blues prevail and Mulvihill has emphasised the importance of remaining in the top tier of Europe.
He added: “We want to finish off as winners. We’ve been disappointed with the last couple of weeks away from home but to have this one in such a magnificent stadium, in front of a big crowd who will be supporting us, would be a great way to finish with a win.
“It’s a winner-takes-all, so whoever wins this game will finish fourth in the pool and will probably be the best Welsh region across the calendar year.
“It’s a game of massive significance for us, after tasting Heineken Champions Cup rugby this year, and we want to go back and player there again next year.”
Cardiff Blues: Gareth Anscombe; Owen Lane, Rey Lee-Lo, Willis Halaholo, Aled Summerhill; Jarrod Evans, Lloyd Williams; Rhys Gill, Ethan Lewis, Dillon Lewis, Seb Davies, Rory Thornton, Josh Turnbull, Olly Robinson, Nick Williams (capt.)
Replacements: Kirby Myhill, Rhys Carre, Dmitri Arhip, George Earle, Shane Lewis-Hughes, Tomos Williams, Garyn Smith, Jason Harries