The 30-year-old will move up from No.3 to open for the first time at Test level as Australia seek back-to-back WTC titles.
Since David Warner retired from Tests in January 2024, Steve Smith, Nathan McSweeney, Konstas, and Travis Head have each joined Khawaja at the top of the order.
Towering allrounder Cameron Green, who hasn't played a Test since March 2024 after having major back surgery, will slot into the coveted No.3 spot.
Green, who won't bowl until later this year, made it impossible for selectors not to pick him after smashing three centuries in a five-game County stint with Gloucestershire.
"Cam Green, the last few weeks he's had, coming back in great form, we thought he deserved a spot somewhere in the batting line-up," Australia captain Pat Cummins said at Lord's on Tuesday.
"We thought three probably suits him best.
"With Marnus moving, we thought it's one spot up, it's not too different to batting three.
"He's done well here in England in the past.
"It's a final, so selectors pick the best 11 for this week."
Teenager Konstas, who burst onto the scene with a blistering debut last Boxing Day, still remains firmly part of Australia's future.
After the WTC final, Australia will play three Tests against the West Indies in the Caribbean, under vastly different conditions to Lord's.
Josh Hazlewood has won the race for the third fast bowling spot and will play his first Test since December.
The 34-year-old broke down with a calf injury against India at the Gabba, but has returned in what he described as career-best form in a title-winning campaign for Royal Challengers Bangalore in the Indian Premier League.
Workhorse quick Scott Boland, who was player-of-the-match when Australia regained the Border-Gavaskar trophy at the SCG in January, misses out.
"There are some guys where you genuinely say, 'You've done nothing wrong, don't change a thing'," said pace bowling skipper Cummins.
"Scotty is just really unfortunate to miss out.
"Joshy Hazlewood comes back in. We know how good he is.
"The message to Scotty is there's a lot of Test cricket coming up in the next couple of years, and just because you're mid-30s, doesn't mean you know you're missing this Test, and that's one Test off your career.
"By having a squad of fast bowlers, hopefully we can extend all our careers for an extra couple of years.
"It's really unfortunate Scotty misses this but the message to him is, 'Don't feel like you're running out of time'."
South Africa, who enter the match as rank underdogs, have also picked their XI.
Bustling right-arm quick Lungi Ngidi will return to partner star fast bowlers Kagiso Rabada and Marco Jansen.
Seamer Dane Paterson misses out, despite taking six wickets in a thrilling win over Pakistan last December.
"It was probably one of the tougher decisions that have been made; we've seen what Pato did for us to the end of last season," Proteas captain Temba Bavuma said.
"But it was more from a tactical point of view. A little bit more pace from Lungi, he's taller as well."
AUSTRALIA: Usman Khawaja, Marnus Labuschagne, Cameron Green, Steve Smith, Travis Head, Beau Webster, Alex Carey, Pat Cummins (capt), Mitchell Starc, Nathan Lyon, Josh Hazlewood.
SOUTH AFRICA: Aiden Markram, Ryan Rickelton, Wiaan Mulder, Temba Bavuma (capt), Tristan Stubbs, David Bedingham, Kyle Verreynne, Marco Jansen, Kagiso Rabada, Keshav Maharaj, Lungi Ngidi.
This AAP article was made possible by support from Amazon Prime Video, which is broadcasting the World Test Championship final.
9°C