Vaughan has recovered from a broken finger that kept him out of the first Test at Lord's that ended in a draw on Monday. The Test at Headingley, in Leeds, starts on Friday.
Batsman Owais Shah, picked in Vaughan's absence, has been dropped from the squad while fast bowler Matthew Hoggard, who suffered a thigh strain at Lord's on Saturday, remains unavailable.
Pace bowler James Anderson and left-armer Ryan Sidebottom, whose single Test appearance was against Pakistan six years ago, have been drafted in to the 13-man squad.
All-rounder Andrew Flintoff was included although he is nursing an ankle injury.
"Michael Vaughan came through his net session today without any adverse reaction while Andrew Flintoff practised earlier today but did not bowl as a precaution," chairman of selectors David Graveney said.
"We will need to reassess Andrew's fitness over the next 48 hours...to see if there is any further reaction to his ankle injury," he told the England and Wales Cricket Board Web site (www.ecb.co.uk).
"We are naturally disappointed to lose a bowler of Matthew Hoggard's calibre for this Test match but remain optimistic that he will be available for the third Test," Graveney added.
"The inclusion of James Anderson and Ryan Sidebottom in the squad is designed to provide us with different options within our pace bowling unit."
The third match of the four-Test series at Old Trafford, Manchester, starts on June 7.
Michael Vaughan (capt), Andrew Strauss, Ian Bell, Paul Collingwood, Alastair Cook, Andrew Flintoff, Steve Harmison, Monty Panesar, Kevin Pietersen, James Anderson, Liam Plunkett, Matt Prior (wk) and Ryan Sidebottom. Coach: Peter Moores.