The hosts also named Middlesex pace bowler Toby Roland-Jones as the only uncapped player in the squad.
Left-handed Ballance was dropped following a dismal showing during England’s two-Test series against Bangladesh last year, but got back on the selectors’ radar after averaging 101 for Yorkshire in the County Championship this season.
National selector James Whitaker says: “Gary Ballance could play his first Test since October.
“He has been in fantastic touch with the bat in the Championship averaging over 100. He deserves to be included and we feel that he will add maturity and experience to our middle-order.”
Ballance would bat at No.3 in Joe Root’s first series as captain, with Root, who took over as skipper from Alastair Cook, dropping to his favoured No.4 position.
Whitaker adds: “There is great excitement around the first Test and with the start of a new era under the captaincy of Joe Root this is an exciting time for English cricket.”
Durham seamer Mark Wood is also back in the side for the first time since 2015, when injury disrupted his initial call-up.
Injuries to Jake Ball and Chris Woakes could see Roland-Jones make his international Test debut at his home ground, while spinner Liam Dawson has been retained after an impressive debut in India.