New Zealand coach John Bracewell said Wednesday 29-year-old McMillan, who has played 55 Tests and 175 one day internationals, was dropped because of a lack of fitness.
"Craig McMillan was omitted from the 30 because of concerns about his fitness," Bracewell said.
"This does not mean Craig has been ruled out of contention for next year's World Cup but he will need to focus his efforts if he is to be selected for the Black Caps over the summer."
McMillan's international form has been poor in recent seasons but he scored a century for New Zealand 'A' against India 'A' in Darwin last month.
The squad includes seven players yet to represent New Zealand in seamer Mark Gillespie, Otago spinner Nathan McCullum -- brother of test wicketkeeper Brendon, wicketkeeper Peter McGlashan, seamer Warren McSkimming, allrounder Mark Orchard, batsman Jesse Ryder and seamer Bradley Scott.
The squad will be reduced to 14 next month ahead of the Champions Trophy.
New Zealand squad: Andre Adams, Nathan Astle, Shane Bond, Stephen Fleming, James Franklin, Peter Fulton, Mark Gillespie, Chris Harris, Gareth Hopkins, Jamie How, Hamish Marshall, James Marshall, Chris Martin, Michael Mason, Brendon McCullum, Nathan McCullum, Peter McGlashan, Warren McSkimming, Kyle Mills, Jacob Oram, Mark Orchard, Michael Papps, Jeetan Patel, Jesse Ryder, Bradley Scott, Mathew Sinclair, Scott Styris, Ross Taylor, Lou Vincent, Daniel Vettori.