The Scotland international is a free agent after being released in the summer by former club Birmingham City, and has had an injury plagued year on the sidelines after a knee operation.
The attacker has not played since September 2010, but looked back to his best in training with the Premier League club last week.
“He has looked good in training and I am delighted with that part of it. I want to sign him,” McCarthy told Mirror Football.
Contract talks over a potential one-year deal have begun, and Sunderland are said to be interested also.
McFadden is best known for a wonder goal in Paris that gave Scotland a 1-0 victory over France.