The Chelsea midfielder, 32, did not feature between 2010 and 2015 and she claims her contract was cancelled after requesting time off for childcare.
Steph Houghton will captain the side, while striker Fran Kirby, who plays for second-tier Reading, is also included.
Arsenal defender and ex-captain Casey Stoney is also in the 23-strong squad.
England begin their World Cup campaign against France on 9 June in Moncton, Canada, with the final of the competition to be played on 5 July.
Head coach Mark Sampson, who took over from former boss Hope Powell in December 2013, has named a squad which features a number of players who were frozen out under Powell and several new recruits.
Chapman, who has three young children, returned to the England team earlier in 2015.
"I want to go out there to start, I wouldn't want to go to be a squad player," said Chapman. "Why would I leave my children to go out there and be a squad player?
"I'm a player that goes out there and gives everything I've got. If that's not good enough then that's not good enough.
"I'll be fighting for a starting XI place."
Sampson said of Chapman's inclusion: "She has a lot demons she wants to put right, a lot of things that she felt could have gone better. I'm confident she will certainly do that this summer because she has had a great season for her club and will go into this tournament in a real good place physically and psychologically."
Welshman Sampson, 32, has also selected Birmingham midfielder Jo Potter, who has already made a return to the side after a seven-year omission. Arsenal striker Lianne Sanderson will travel after a fall-out with Powell led to her stopping playing for England in 2010.
Reading forward Kirby, 21, plays in the Women's Super League 2 and quit playing football four years after a bout of depression following the death of her mother.
She is one of the new breed of players under Sampson, which also includes 28-year-old Portland Thorns striker Jodie Taylor, who has only eight caps.
Arsenal defender Stoney, 32, makes the travelling party which also faces group games against Mexico and Colombia.
Skipper Houghton is one of several players who are coming back from injury with the tournament held on artificial pitches.
Her Manchester City team-mates Toni Duggan and Lucy Bronze are selected after recent knee injuries. Taylor, Kirby and midfielders Jordan Nobbs and Karen Carney have also been struggling with problems.
Notts County's Ellen White is back in after a year out with a cruciate injury.
But Liverpool striker Natasha Dowie, Gothenburg midfielder Anita Asante, Notts County forward Jess Clarke and Manchester City left-back Demi Stokes have been left out.
England, sixth in Fifa's world rankings, will aim to improve on their display at Euro 2013 when they were knocked out at the group stage without winning a game.
They won every match in qualifying for the 2015 World Cup, which will be expanded from 16 to 24 teams for the first time.
England World Cup squad:
Goalkeepers: Siobhan Chamberlain (Arsenal), Karen Bardsley (Manchester City), Carly Telford (Notts County)
Defenders: Lucy Bronze (Manchester City), Steph Houghton (Manchester City), Alex Scott (Arsenal), Laura Bassett (Notts County), Alex Greenwood (Notts County), Claire Rafferty (Chelsea), Casey Stoney (Arsenal)
Midfielders: Jordan Nobbs (Arsenal), Fara Williams (Liverpool), Jill Scott (Manchester City), Jade Moore (Birmingham), Karen Carney (Birmingham), Jo Potter (Birmingham), Katie Chapman (Chelsea)
Forwards: Toni Duggan (Manchester City), Eni Aluko (Chelsea), Lianne Sanderson (Arsenal), Jodie Taylor (Portland Thorns), Fran Kirby (Reading), Ellen White (Notts County)