Michael Carrick, Andy Carroll and Kyle Walker were all left out, the former the victim of a poor season for Manchester United. Carroll has had an injury-ravaged season, while Walker misses out due to a pelvic injury.
Carrick and Carroll are both on the standby list.
Shaw was selected ahead of Ashley Cole, who retired from international football on Sunday night after being told he had not made the squad.
There were no surprises in defence.
On the inexperienced look to his squad, Hodgson said: "You get experience by getting the opportunity.
"It's wrong to focus totally on the fact there are those who are inexperienced, because everyone is inexperienced until they get the chance to do the job.
"I think they've played so well and been so effective in their club teams that they've really imposed their ability on my thinking.
"I'm sure if I'd picked a squad after the final qualifier in October it would have looked quite different, but a lot of water has passed under the bridge since then.
"You can't ignore what people are doing on a week-to-week basis and your decision is based on who is the best man for the job."
He added: "This is a 23-man squad, we're not talking about 11. In that 23 there are an awful lot of caps.
"We should not get hung up that there are youngsters in there. I am not taking anyone purely for the experience."
On Barkley's inclusion at the end of a breakthrough season for the Everton youngster, Hodgson said: "He's a very, very exciting player, a very exciting talent and if he can continue at that level he has a very exciting future ahead of him.
"But I would hope people will temper their expectations of him."
Hodgson admitted the decision to leave out Cole was "an unbelievably hard" call and praised the "gracious" way he accepted it.
Cole's Chelsea team-mate Lampard turns 36 in June, but Hodgson said the midfielder's "leadership qualities and his abilities" would be of use to England.
Several England players have been struggling with injuries in recent months, including Rooney, Wilshere, Oxlade-Chamberlain and Jagielka, but Hodgson said the only player whose fitness remained a slight concern was Jones.
He revealed Stones would replace Jones in the final squad if he did not recover from his shoulder problem in time.
Hodgson hinted his back five positions were pretty much set in stone, but that his midfield and forward selections could yet surprise.
He said: "Certainly in those front six positions there are a lot of options, I would like to think that's a very exciting group we have for those front six positions, while the back four and goalkeeper tend to be a lot more stable."
Hodgson said he had no doubts that captain Steven Gerrard would overcome his title disappointment with Liverpool.
"Steven is mentally very strong, extremely proud. He loves Liverpool, but also England and I have no doubt that he will be as good as he ever was during the tournament," he said.
The England boss also has faith in Rooney, who has largely disappointed for England at major tournaments and missed the end of what was a largely miserable Manchester United campaign through injury.
"It's up to Wayne and if it's to do with desire and ambition and wanting to do it, then there's no doubt in my mind that we have nothing to fear with Wayne in that respect," he said.
"I've said to the players this week for them to go and forget football for a week and get themselves mentally prepared for football in the weeks we have ahead.
"Wayne's decided to take some physios with him where he's going and continue his programme because he's so determined that when we meet up on the 19th he'll be able to join in straight away.
"So attitude (is) spot on, desire could not be better. Has he got the ability? Yes he has, so it's just a case of bringing on the matches."
Asked if he believed England could win in Brazil, Hodgson said: "I believe the squad can win the World Cup, because otherwise what's the point in taking them?
"If we are going to win it we will have to play very well, prepare very well and this talented group of players have to show their talent."
England squad in full:
Defenders: Leighton Baines (Everton), Gary Cahill (Chelsea), Phil Jagielka (England), Glen Johnson (Liverpool), Phil Jones (Manchester United), Luke Shaw (Southampton), Chris Smalling (Manchester United).
Midfielders: Ross Barkley (Everton), Steven Gerrard (Liverpool), Jordan Henderson (Liverpool), Adam Lallana (Southampton), Frank Lampard (Chelsea), James Milner (Manchester City), Alex Oxlade-Chamberlain (Arsenal), Raheem Sterling (Liverpool), Jack Wilshere (Arsenal).
Attackers: Rickie Lambert (Southampton), Wayne Rooney (Manchester United), Daniel Sturridge (Liverpool), Daniel Welbeck (Manchester United).
Standby: John Ruddy (Norwich City), Jon Flanagan (Liverpool), John Stones (Everton), Michael Carrick (Manchester United), Tom Cleverley (Manchester United), Andy Carroll (West Ham United), Jermain Defoe (Toronto FC).
- Sports & Recreation
- Manchester United
- Andy Carroll
- Wayne Rooney
- Michael Carrick
- Ross Barkley
- Ashley Cole
- Frank Lampard
- Rickie Lambert
- Phil Jagielka
- Jack Wilshere