Dragons lock Hill, who captained his country in two Tests against Argentina last year, could be unavailable until halfway through Wales' pool schedule. He has not played since February.
But Wales head coach Warren Gatland has selected him for Japan, while fly-half Rhys Patchell also features following his try-scoring exploits against Ireland on Saturday.
Two of the more surprising omissions were props Rob Evans and Samson Lee.
Squad members learnt of selection via a video produced by the Welsh Rugby Union when each player was told by a member of their community club that they had been chosen.
It will be lock Alun Wyn Jones' fourth World Cup, with wing George North and hooker Ken Owens featuring in the tournament for a third time.
There are call-ups for Saracens prop Rhys Carre, who made his Test debut against Ireland, and Scarlets flanker James Davies.
Gatland has opted for a split of 13 backs and 18 forwards, which includes three centres, two fly-halves and five props.
Other players to miss out include Owen Lane, Jonah Holmes, Scott Williams, Jarrod Evans and Bradley Davies.
Gatland and his coaches applied the final selection touches during a three-hour meeting on Saturday night, with around half a dozen places believed to be at the centre of their debate.
Wales' opening World Cup game is against Georgia in Toyota City on September 23, followed by Australia in Tokyo six days later.
The tournament will be Gatland's farewell from a role he has filled since 2008, during which time Wales have won four Six Nations titles, three Grand Slams and reached a World Cup semi-final.
The squad contains a combined cap total of 1,064.
Gatland said: "Selection is always the toughest part of the job and that is especially true come World Cup time.
"Reducing the squad down to 31 has been extremely hard especially when you look at the depth we have created and the amount of work the training squad have put in – for some, 14 weeks of training.
"We are really happy with the final 31, we feel there is an excellent blend to the squad, in terms of talent, experience and age profile and we are all incredibly excited about heading to Japan and what lies ahead.
"These players have performed and delivered for Wales and deserve the opportunity to represent their nation at the game's showpiece tournament."