Legspinner Ahmed, who was recently granted Australian citizenship, is set to make his international debut. The 31-year-old had arrived in Australia in 2010 from Pakistan seeking asylum. He had played 10 first-class matches in Pakistan before his arrival.
Ahmed has replaced left-arm spinner Xavier Doherty in the Australian squad, led by Michael Clarke.
Australia will play 2 T20Is against England followed by a ODI versus Scotland. Then, then face England again in five ODIs. The first T20I starts on August 29.
Commenting on the squad, National Selector John Inverarity said: "The NSP today announced an 18-man squad for the two T20s against England, the ODI against Scotland in Edinburgh and the five ODIs against England to be played from 29 August to 16 September. The NSP will reduce the squad, probably to 15, after the T20 matches.
"Fawad Ahmed gets his opportunity as the squad's lead spinner. He replaces Xavier Doherty who had that role in the ICC Champions Trophy played in June. While Xavier will be disappointed, he remains in strong contention for selection for the Tour of India in October. Fawad has been a consistent wicket-taker on the Australia A tour of Zimbabwe and South Africa. He is a mature and very good leg-spin bowler and the NSP is keen to see how he fares in international competition.
Australia's ODI squad: Michael Clarke (captain), George Bailey (vice-captain), Fawad Ahmed, Nathan Coulter-Nile, James Faulkner, Aaron Finch, Josh Hazelwood, Phil Hughes, Mitchell Johnson, Shaun Marsh, Glenn Maxwell, Clint McKay, Steve Smith, Mitchell Starc, Adam Voges, Matthew Wade, David Warner, Shane Watson.
29 Aug - T20I v England, Southampton
31 Aug - T20I v England, Durham
3 Sep - ODI v Scotland, Edinburgh
6 Sep - ODI v England, Headingly
8 Sep - ODI v England, Old Trafford
11 Sep - ODI v England, Edgbaston
14 Sep - ODI v England, Cardiff
16 Sep - ODI v England, Southampton