Reports emerged of a host of key exclusions from the squad, which also does not feature Harry Maguire, Trent Alexander-Arnold or Morgan Gibbs-White.
Attacking midfielders Foden and Palmer miss out on the back of mixed performances for Manchester City and Chelsea, respectively.
Alexander-Arnold was not picked for Tuchel's recent squads, with the right-back spot filled in by Reece James and the versatile Tino Livramento and Djed Spence.
Nottingham Forest's Gibbs-White also doesn't earn a place, despite being the current top English scorer in the Premier League alongside Watkins and Dominic Calvert-Lewin, also a snub.
"It was difficult, sometimes painfully difficult and like even in the phone calls I felt the emotion," Tuchel said when telling players they had not been selected.
"So I called all players that were with us in camp at least one time, I called them, I wanted to show at least the appreciation and the respect for what they have done."
Watkins and Toney in
Ollie Watkins is a returnee after helping Aston Villa win the Europa League in midweek and having hit superb form in the back half of the campaign.
He will be expected to compete with minutes behind Harry Kane alongside Ivan Toney, who is recalled after scoring 42 goals for Al Ahli in Saudi Arabia.
The creative spark will be produced by Jude Bellingham, Eberechi Eze and Morgan Rogers, with Bukayo Saka, Noni Madueke, Anthony Gordon and Marcus Rashford as the wing options.
Manchester United midfielder Kobbie Mainoo is in the fold, as is the experienced Jordan Henderson, but it comes at the expense of talents Adam Wharton and Alex Scott.
In defence, John Stones is an inclusion despite an injury-hit season, but there is no room for Levi Colwill or Trevoh Chalobah, while Luke Shaw and Lewis Hall have been overlooked at left-back.
"It is truly exciting and a great privilege to be able to name an England squad for the World Cup," Tuchel said.
"It has been a tough process to decide on the nomination, but I have full belief in this group of players.
"They all deserve their place. The squad and everyone involved with the team will give all we can to make the country proud. We know they are behind us, and we hope for a very special summer."
England will play a warm-up match against New Zealand on June 6th and Costa Rica on June 10th in Florida before their World Cup campaign begins.
Their first match of the tournament is against Croatia on June 17th, before playing Ghana (June 23rd) and wrapping up the group stage versus Panama (June 27th).
England's 2026 World Cup squad:
Goalkeepers: Dean Henderson (Crystal Palace), Jordan Pickford (Everton), James Trafford (Manchester City)
Defenders: Dan Burn (Newcastle), Marc Guehi (Manchester City), Reece James (Chelsea), Ezri Konsa (Aston Villa), Tino Livramento (Newcastle), Nico O'Reilly (Manchester City), Jarell Quansah (Bayer Leverkusen), Djed Spence (Tottenham), John Stones (Manchester City)
Midfielders: Elliot Anderson (Nottingham Forest), Jude Bellingham (Real Madrid), Eberechi Eze (Arsenal), Jordan Henderson (Brentford), Kobbie Mainoo (Manchester United), Declan Rice (Arsenal), Morgan Rogers (Aston Villa)
Forwards: Anthony Gordon (Newcastle), Harry Kane (Bayern Munich), Noni Madueke (Arsenal), Marcus Rashford (Barcelona, loan from Manchester United), Bukayo Saka (Arsenal), Ivan Toney (Al Ahli), Ollie Watkins (Aston Villa)