Callaghan holds the record for most appearances at Liverpool (857) and played for two managerial greats - Bill Shankly and Bob Paisley.
"I met Rafa a few times and he's a very, very nice man. He'll get a fantastic reception," Callaghan told the Mail on Sunday.
"He won trophies, he is a well respected man and we'll find that on Sunday when Chelsea come. He still has a house on Merseyside and he's a character.
"I just think Rafa's moved on, but in his own mind he would like at some stage to come back to Liverpool because he's so passionate about it.
"Whether that will happen or not, I don't know.
"He's had a terrible reception from the Chelsea fans and I'm sure he's going to get a great welcome on Sunday.