McGrath has remained out of action since withdrawing from the team to be with his wife Jane, who is undergoing treatment after being re-diagnosed with cancer.
McGrath returned to training in July after Jane's recovery plan went smoothly and made himself available for selection.The veteran medium pacer will mark his international return with the Champions Trophy as he prepares to be match-fit for the upcoming Ashes series against England in November.
''Following extensive discussion between Glenn McGrath, the coach and the selection group, we've decided that the best way for Glenn to make his way back into international cricket is to play international cricket.
''We believe the combination of the Malaysian tri-series and the ICC Champions Trophy is ideal preparation for what will be a huge summer of cricket for Glenn in Australia and overseas,'' Chairman of selectors Andrew Hilditch said in a statement here.
Their are no major surprises in the rest of the squad, which will be led by Ricky Ponting with Adam Gilchrist as his deputy.
''We've picked a strong squad, which blends experience with some younger talent. Australia has been successful in ODIs for a long time but we haven't won the ICC Champions Trophy and we've picked a side that we believe is capable of winning it,'' Mr Hilditch said.
The Australian squad for the ICC Champions Trophy: Ricky Ponting (captain), Adam Gilchrist (vice-captain), Nathan Bracken, Stuart Clark, Michael Clarke, Brad Hogg, Michael Hussey, Mitchell Johnson, Simon Katich, Brett Lee, Damien Martyn, Glenn McGrath, Shane Watson, Andrew Symonds