Costa is currently AWOL in Brazil and has refused to return to Chelsea.
He wants to leave the club for Atletico Madrid but the La Liga side’s transfer ban is making that deal difficult.
Costa has been urged by his agent Jorges Mendes to accept a short-term move to AC Milan in order to stay in contention for Spain selection ahead of next summer’s World Cup.
But Costa has refused to consider a move to Milan and has now been dropped from the national side.
Instead, veteran ex-Barcelona striker David Villa is back in the squad.
Villa has spent the last three years at New York City FC in the MLS.
His return may come as a surprise – Villa is 35 and last played for Spain in 2014.
But Spain’s relative paucity of centre-forwards, accompanied by Costa’s refusal to train at Chelsea, means he is a viable option for manager Julen Lopetegui.
Villa posted a message on instagram regarding his inclusion in the Spain side.
“Very excited. Thanks to all who trust me and give me the opportunity to wear this shirt again,” he wrote.
Spain will host Italy in a crunch World Cup qualifier on September 2, before a clash in Liechtenstein three days later.
Spain squad for World Cup qualifiers
De Gea, Reina, Kepa, Alba, Azpilicueta, Bartra, Carvajal, Nacho, Monreal, Piqué, Ramos, Isco, Thiago, Busquets, Suso, Silva, Iniesta, Saúl Ñíguez, Koke, Marco Asensio, Yago Aspas, Vitolo, Morata, Pedro and Villa.