Southgate named a 28-man squad on Thursday for UEFA Nations League matches against Italy and Germany later this month, which included a first call-up for Brentford's Ivan Toney and the recalls of Chelsea defender Ben Chilwell and Tottenham Hotspur's Eric Dier.
Manchester United's Harry Maguire kept his place and Luke Shaw was brought back in despite both finding themselves marginalised under Erik ten Hag at Old Trafford, but two other United players who have shown signs of rediscovering their best in recent weeks were omitted.
Rashford was already a doubt with a thigh problem, but Sancho is available and was hopeful of a return to the senior setup after an upturn in form which featured goals against Liverpool and Leicester City.
Sancho's last call-up came in October 2021, while Rashford has been overlooked since November last year.
"This is a bigger than normal squad and part of the rationale is that we are very close to a World Cup and we feel, although our results were disappointing in the summer, we have picked on the basis of form and capability over a long period," Southgate said in a statement.
"There were certain players we wanted to keep involved this time, but that said it doesn't mean that this is the end for some of the others who aren't involved. Marcus Rashford, for example, has shown some encouraging signs recently. He is a player we know well so if he can perform at a high level in the next few weeks, he of course will be under consideration.
"Clearly, we have a number of players including Ben Chilwell, Luke Shaw, Harry Maguire and Kalvin Phillips who are not playing a lot of minutes with their club. It is not ideal, but we feel they have been, and can be, important players for us. It is not a perfect situation but there is still a lot of football to be played before Qatar."
Everton goalkeeper Jordan Pickford misses out with a thigh problem and is replaced by Dean Henderson, who has thrived at Nottingham Forest on loan from United, while Chilwell is back in the group for the first time since November 2021 having suffered a cruciate knee ligament injury which sidelined him for most of last season.
Dier last featured for England in November 2020 and has not been selected for a squad since March last year, but the 28-year-old has begun the season in encouraging fashion at Spurs under Antonio Conte.
"With Eric Dier, he has been playing well for a period of time," Southgate added. "We think it is a really close call across our centre-backs and he has deserved to be picked back in the group. We know what a good character he is. He fits in with the culture and has great international experience and leadership qualities.
"With Ivan Toney, we have been tracking him for a long time. I had a good chat with Thomas Frank about him last season. His form and his qualities -- not only his goal scoring but his technical ability, build-up play and aerial prowess -- gives us a different threat to some of the other players we could pick.
"Reflecting on the last couple of months, clearly as an international manager you don't have any games to quickly put the disappointment behind you. We have had a long period to reflect but now we are really looking forward to two high-quality matches that will be a great test for us and a crucial part of our preparation for the World Cup. It is only eight weeks until we will be naming our squad for Qatar so every minute counts."
The players to miss out will be sweating on their place for the finals in Qatar with just over two months until England's first game against Iran on Nov. 21.
FIFA rules allow countries to select an expanded 26-man group for the finals to give managers the chance for extra contingency planning should a player test positive for COVID-19. Southgate is expected to name his finals squad on Nov. 14.
Southgate also said he didn't want to hold a news conference following the announcement as a mark of respect to the death of Queen Elizabeth II.
"We recognise the country is still in a period of mourning and my thoughts remain with the Royal Family," he said. "While it is important to explain some of our decisions around selection, we didn't feel it appropriate to hold a full press conference, when it might divert attention from where people's minds should be at this time."
Defenders: Trent Alexander-Arnold (Liverpool), Ben Chilwell (Chelsea), Conor Coady (Everton), Eric Dier (Tottenham), Marc Guehi (Crystal Palace), Reece James (Chelsea), Harry Maguire (Manchester United), Luke Shaw (Manchester United), John Stones (Manchester City), Fikayo Tomori (AC Milan), Kieran Trippier (Newcastle), Kyle Walker (Manchester City)
Forwards: Tammy Abraham (AS Roma), Jarrod Bowen (West Ham), Phil Foden (Manchester City), Jack Grealish (Manchester City), Harry Kane (Tottenham), Bukayo Saka (Arsenal), Raheem Sterling (Chelsea), Ivan Toney (Brentford)