The in-form Brentford striker is in Southgate's first squad since the World Cup quarter-final exit to France in December for Euro 2024 qualifiers against Italy and Ukraine this month.
But Chelsea's Raheem Sterling is missing for the opening qualifying matches, having been absent for the Blues' 3-1 win at Leicester at the weekend.
Toney is still waiting for a Football Association verdict after being charged with 262 breaches of FA gambling rules, with a lengthy suspension possible.
He missed out for the tournament in Qatar - having been in the squad for Nations League games against Germany and Italy in September without playing.
He scored his 17th goal of the season in Brentford's 2-0 win at Southampton on Wednesday.
Toney's inclusion means Aston Villa's Ollie Watkins, with six goals in his last seven games, misses out.
Manchester City right-back Kyle Walker, being investigated by police after allegedly exposing himself in a bar, is included in the 25-man squad.
Along with Sterling, Ben White, Trent Alexander-Arnold, Conor Coady and Callum Wilson are absent having all gone to the World Cup.
Chelsea's Ben Chilwell has earned a recall for the first time since the 10-0 win in San Marino in November 2021.
Harry Maguire retains his place despite starting just two Premier League games for Manchester United this year.
Leicester's James Maddison, whose World Cup was wrecked by a knee injury, keeps his place along with Kalvin Phillips, despite his lack of action for Manchester City.
England travel to Naples to face Italy on March 23 before hosting Ukraine on March 26 in Group C.