Man Utd's Rashford left out of England's Euro 2024 squad
Former Liverpool captain Jordan Henderson and Chelsea skipper Reece James were among the other big names to miss out on the squad, that must be trimmed to a maximum of 26 before the tournament in Germany begins.
Crystal Palace's Adam Wharton is rewarded for the Eagles' brilliant end to the Premier League season with his first-ever call up.
Everton's Jarrad Branthwaite and Liverpool duo Jarell Quansah and Curtis Jones are the other uncapped players selected with Southgate short on defensive options.
England face Bosnia and Herzegovina on June 3 and Iceland four days later before jetting off for Germany, where they are one of the favourites to win the tournament.
The wealth of options available to Southgate in attacking areas means Rashford misses out on a major international tournament for the first time since the 2014 World Cup.
Rashford has scored just eight times in 42 appearances for his club this season and only recently returned from injury.
"These are difficult calls. With Marcus I just feel other players in that area have had better seasons. It's as simple as that," said Southgate.
In a social media post, Rashford said: "Wishing Gareth and the boys all the best."
Henderson's injury-hit move to Ajax in January after a short spell in Saudi Arabia has not done enough to earn the 33-year-old a place.
"Henderson's given himself every chance. The determining factor was the injury he picked up in the last (international) camp," added Southgate.
"He missed five weeks and wasn't able to get back up to the level of intensity. It was a difficult decision."
The same goes for Jadon Sancho despite his renaissance on his return to Champions League finalists Borussia Dortmund on loan from United.
Raheem Sterling and Kalvin Phillips were also overlooked despite shining for Southgate in the past at major tournaments.
Real Madrid's Jude Bellingham, Phil Foden, who fired Manchester City to the Premier League title on Sunday, and Arsenal winger Bukayo Saka are included as part of a fearsome collection of creative talent to supply England's all-time top goalscorer Harry Kane.
England's men begin their quest to win a major tournament for the first time in 58 years against Serbia on June 16 before facing Denmark and Slovenia in Group C.
The Three Lions have come agonisingly close to glory under Southgate before, losing the Euro 2020 final on penalties to Italy.
England also reached the 2018 World Cup semi-finals and last eight of the 2022 World Cup.
"Are we one of those teams who can win? Of course," said Southgate.
"I'd be an idiot if I said no, but if I said yes, that doesn't mean there's not a lot of work ahead of us.
"They know what is possible, they know what they've won at club level and what that's taken. You can see cup football, you have to navigate game-by-game."
Squad:
Goalkeepers: Jordan Pickford (Everton), Aaron Ramsdale (Arsenal), Dean Henderson (Crystal Palace), James Trafford (Burnley)
Defenders: Kyle Walker, John Stones (both Manchester City), Luke Shaw, Harry Maguire (both Manchester United), Jarrad Branthwaite (Everton), Jarell Quansah, Joe Gomez (both Liverpool), Marc Guehi (Crystal Palace), Kieran Trippier (Newcastle), Ezri Konsa (Aston Villa), Lewis Dunk (Brighton)
Midfielders: Declan Rice (Arsenal), Kobbie Mainoo (Manchester United), Adam Wharton (Crystal Palace), Conor Gallagher (Chelsea), Trent Alexander-Arnold, Curtis Jones (both Liverpool)
Forwards: Harry Kane (Bayern Munich/GER), Ollie Watkins (Aston Villa), Ivan Toney (Brentford), Jarrod Bowen (West Ham), Bukayo Saka (Arsenal), Anthony Gordon (Newcastle), Cole Palmer (Chelsea), James Maddison (Tottenham), Jude Bellingham (Real Madrid/ESP), Phil Foden, Jack Grealish (both Manchester City), Eberechi Eze (Crystal Palace)