Ahead of the 2007–08 season, Arca was subjected of a transfer bid from his former club, Sunderland when they made a £2 million bid but Middlesbrough turned down the offer. Amid to the transfer speculation, Arca continued to remain his first team place, playing in the midfield position at the start of the season. He then set up the opening goal for Mido, in a 2–1 win over Fulham on 18 August 2007. Arca scored his first goal for the club in a follow–up match against Tyne–Tees rivals, Newcastle United. A month later on 22 September 2007, he scored his second goal of the season, in a 2–2 draw against Sunderland. During the match, he is still liked strongly by most Sunderland fans despite moving to their local rivals and in the 2007 Tees–Wear derby at the Riverside, when he went off injured after scoring against them, he was cheered by the visiting Sunderland supporters. Unfortunately, following this injury that saw him out for two months, Arca struggled to regain his excellent form in the months prior to it. It wasn't until on 9 December 2007 when he made his return from injury, coming on as a late substitute, in a 2–1 win over Arsenal. Arca continued to regain his first team place since returning from injury. In January 2008, Arca was named club captain, replacing George Boateng. His first game as captain was against Blackburn Rovers in the Premier League in a 1–1 draw. After only a few games leading the team, he was replaced by Emanuel Pogatetz. By March, Arca was dropped from the first team by Manager Gareth Southgate, which he said: "I felt with Julio he just needs that break from the team. He's a fantastic player, he's very much with us and he understands why I left him out". It wasn't until on 6 April 2008 when he returned to the first team, starting the whole game, in a 2–2 draw against Manchester United. Since returning from injury, Arca continued to regained his first team for remaining matches of the 2007–08 season. He also assisted two matches in the last three remaining matches of the season, against Sunderland and Manchester City. At the end of the 2007–08 season, Arca went on to make twenty–nine appearances and scoring two times in all competitions.