Barkley made a superb start to the season for Roberto Martinez's men, scoring in their opening-day draw with Norwich City and the 3-2 win over Newcastle United back in September.
The 19-year-old has broken into the England set-up as a result of his performances, and has been touted as a possible candidate for Roy Hodgson's FIFA World Cup squad.
However, Barkley has been limited to substitute appearances in Everton's recent goalless draws with Tottenham and Crystal Palace.
Still, Royle, who managed Everton between 1994 and 1997, believes the potential selection of Barkley could have a big impact on Everton's meeting with fierce rivals Liverpool at Goodison Park on Saturday.
"You can tell how he's (Martinez) thinking about the game when he announces the side," Royle told Perform.
"If he's playing Barkley, I think he'll be starting with a slightly more offensive attitude, if he's playing Pienaar and Osman I'm sure it will be a slightly more steady approach to the game."
Royle does not doubt Barkley's potential, but feels the midfielder needs to define his role if he is to fulfil his promise.
"Barkley started the season on fire, then took a little dip as kids do and only Martinez will know how he's feeling about bringing him back," Royle added.
"He's got to define his role. Is he a midfielder or is he sort of a loose forward?
"If he's a loose forward he's got to score goals if he's a midfielder he's got to combine and get forward as well. It depends on how well he does for Everton, it's as simple as that.
"He needs to recover his early season sparkle, but I don't think it's a lapse in form so much as a young kid finding his way in the game, and he shows great promise."
Everton sit sixth in the Premier League and will go level with Liverpool on 23 points with victory at the weekend.
