US born forward Rossi was included in the squad, published on the Italian Football Federation website (www.figc.it), for the World Cup qualifiers away to Denmark on Oct. 11 and at home to Armenia four days later.
He is set to make his first appearance since playing against Serbia two years ago.
He fought desperately to be fit again in time for Euro 2012 only to re-injure the knee in training two months before the tournament.
Villarreal sold him to Fiorentina at the start of this year and he finally made his comeback against Pescara in May, playing 27 minutes in the final match of last season.
This season, he has surpassed expectations by scoring five league goals for Fiorentina.
Balotelli's place in the squad was in the balance after he was sent off at the end of a 2-1 home defeat by Napoli two weeks ago for arguing with the referee and given a three-match ban.
Coach Cesare Prandelli has in the past punished players for similar misdemeanours, including Balotelli himself, but on this occasion decided not to enforce his code of ethics.
AS Roma defender Federico Balzaretti was called up for the first time since last November.
Italy have already guaranteed top spot in European Group B and qualified for the World Cup finals in Brazil next year.
Defenders: Ignazio Abate (AC Milan), Davide Astori (Cagliari), Federico Balzaretti (AS Roma), Leonardo Bonucci (Juventus), Giorgio Chiellini (Juventus), Lorenzo De Silvestri (Sampdoria), Manuel Pasqual (Fiorentina), Andrea Ranocchia (Inter Milan)
Midfielders: Alberto Aquilani (Fiorentina), Antonio Candreva (Lazio), Daniele De Rossi (Roma), Alessandro Diamanti (Bologna), Alessandro Florenzi (Roma), Emanuele Giaccherini (Sunderland), Claudio Marchisio (Juventus), Riccardo Montolivo (Milan), Thiago Motta (Paris St Germain), Andrea Pirlo (Juventus), Andrea Poli (AC Milan), Marco Verratti (Paris St Germain).