Italy omit Borriello and Rossi
Goalkeeper Salvatore Sirigu, defender Mattia Cassani and midfielder Andrea Cossu were the other players from a provisional 28-man squad to miss out on the trip to South Africa for the June 11-July 11 finals.
Winger Mauro Camoranesi, part of the team that triumphed in the 2006 tournament, was included on the Italian football federation's squad list despite pulling out of altitude training in the Alps on Tuesday with a knee injury.
He can be replaced before the start of the tournament if the injury, which has initially been assessed as not serious, becomes worse.
The world champions, who face Mexico and Switzerland in their final friendlies on Thursday and Saturday, meet Paraguay in their Group F opener in Cape Town on June 14 before facing New Zealand and Slovakia.
World Cup winner Lippi, who will quit after the finals and be replaced by Fiorentina's Cesare Prandelli, waited until the final hours of deadline day to name his squad having earlier planned to announce his 23 in mid-May.
Injury-prone Borriello has had a successful season at Milan, complete with some spectacular goals, while Rossi can play in any position across the front line.
However, Lippi has opted for the pace and power of Quagliarella despite his relatively modest goal return of 11 in Serie A for Napoli last term.
Giampaolo Pazzini was also included in the list of strikers alongside established names Alberto Gilardino, Vincenzo Iaquinta and Antonio Di Natale.
Lippi had been criticised in the Italian media for relying too heavily on his 2006 heroes during a lacklustre qualification campaign but a handful of young players such as Bari defender Leonardo Bonucci have made the cut.
"The age factor is certainly a variable that can influence things. The motivation and physical condition of an older player can condition selections," former Italy midfielder Stefano Fiore, who played in the Euro 2000 final, told Reuters.
"But I don't think this should be a big problem for Italy. The coach has his men, those he won the World Cup with, and even if they are not young they can make up for it with experience."
Juventus midfielder Claudio Marchisio, 24, is one young player already established in the Azzurri starting XI and shaping up to be a key man even if fans do not expect Italy to prosper this time.
Marchisio was earmarked to fill the problem left wing role in a 4-4-2 but has been employed as a playmaker in a 4-2-3-1 formation in recent training sessions.
"I thank Lippi for the faith he is showing in me. I don't consider myself as a second striker but as a midfielder who offers a bit more... and inserts himself into spaces," he told reporters.
Goalkeepers: Gianluigi Buffon (Juventus), Morgan De Sanctis (Napoli), Federico Marchetti (Cagliari)
Defenders: Salvatore Bocchetti (Genoa), Leonardo Bonucci (Bari), Fabio Cannavaro (Juventus), Giorgio Chiellini (Juventus), Domenico Criscito (Genoa), Christian Maggio (Napoli), Gianluca Zambrotta (AC Milan)
Midfielders: Mauro Camoranesi (Juventus), Daniele De Rossi (AS Roma), Gennaro Gattuso (AC Milan), Claudio Marchisio (Juventus), Riccardo Montolivo (Fiorentina), Angelo Palombo (Sampdoria), Simone Pepe (Udinese), Andrea Pirlo (AC Milan)
Forwards: Antonio Di Natale (Udinese), Alberto Gilardino (Fiorentina), Vincenzo Iaquinta (Juventus), Giampaolo Pazzini (Sampdoria), Fabio Quagliarella (Napoli)