Lee had been laid low by an elbow injury earlier this year and had even announced his Test retirement to ensure his body remains fit for shorter formats.
Meanwhile, Michael Clarke will lead the Australians in the April 30-May 16 event with all-rounder Cameron White as his deputy, Cricket Australia said in a statement.
"While Brett Lee hasn't played the amount of cricket we would've liked him to in preparation for this World Cup, at his best he is one of the best Twenty20 cricketers in the world. He also has the opportunity of continuing to play in the IPL as preparation for this tournament," said CA's National Selection Panel Chairman Andrew Hilditch.
Hilditch said the squad has the right mix of youth and experience.
"We've been preparing hard for this tournament since the last event and we're pleased with the squad's performance in recent games, under the captaincy of Michael Clarke. The squad has a good mix of experience and exciting young talent and is capable, at its best, of playing competitive and entertaining Twenty20 cricket," he said.
Hussey brothers -- Mike and David -- both earned a place in the squad that doesn't offer any major surprise.
"Mike Hussey brings great international experience and is in fantastic form in all formats of the game right now. We've also added Tim Paine to give us cover in case of injury to Brad Haddin and of course, Tim's ability with the bat, which saw him have a great KFC Twenty20 Big Bash, more than warrants his selection," he added.
Australia are in Group A alongside Pakistan and Bangladesh. They play their first pool match against Pakistan on May 2 before taking on Bangladesh on May 5.
Australia also announced their women's squad for the Twenty20 World Cup and it would be led by Jodie Fields.
The men's squad: Michael Clarke (Captain), Cameron White (Vice-captain), Daniel Christian, Brad Haddin, Nathan Hauritz, David Hussey, Mike Hussey, Mitchell Johnson, Brett Lee, Dirk Nannes, Tim Paine, Steven Smith, Shaun Tait, David Warner, Shane Watson.
The women's squad: Jodie Fields (Captain), Alex Blackwell (Vice-captain), Jessica Cameron, Sarah Elliott, Rene Farrell, Rachael Haynes, Julie Hunter, Shelley Nitschke, Erin Osborne, Ellyse Perry, Leah Poulton, Lisa Sthalekar, Clea Smith, Elyse Villani.