Palu has been out of the team since July with a foot injury suffered during a Test in New Zealand but the 28-year-old has been cleared to start in the back-row after "an intense and accelerated rehabilitation".
Australia and the US are effectively battling for the second place in pool A behind tournament favourites and hosts England that will guarantee one of them a place in the quarter-finals, so everything hinges on their final matches.
After the US play group makeweights Samoa in York, Palu's Australia will know what they need to do against overwhelming favourites England in Brighton later on Saturday (Sunday AEST) to book their last-eight spot.
One bonus point -- either for losing by less than seven points or by scoring four tries -- would be enough to guarantee Australia progression to the knockout stages. Otherwise, they may well have to hope their points difference is superior to the Americans.
But having Palu back is huge for the team. "She has worked tremendously hard with her rehab and we are excited to have her back as both a player and leader," said Wallaroos coach Jo Yapp.
It's a significant moment for Palu, who despite being part of the World Cup squad in 2022, never played in that tournament.
Her return is one of two changes from the team that shared a remarkable 31-31 draw with USA in York last weekend.
Adiana Talakai will start at hooker in a new-look front row that features Lydia Kavoa and Asoiva Karpani, with Tania Naden, Faliki Pohiva and Bridie O'Gorman all shifting to the bench.
The Wallaroos will be looking for magic from their star teenage fullback Caitlyn Halse, who's been one of the tournament's standouts so far.
Tabua Tuinakauvadra and Emily Chancellor also move to the replacements bench with Palu and record cap winner Ashley Marsters in the starting XV. Meanwhile, Trilleen Pomare and Cecilia Smith swap places in the matchday 23.
"We know the permutations around the game against England but the focus remains on ourselves and improving on last week," said Yapp.
"We could not fault the effort of the group last week, but we also recognised there are key areas we need to improve on in preparation for our next game."
Australia team:
1 Lydia Kavoa, 2 Adiana Talakai, 3 Asoiva Karpani, 4 Kaitlan Leaney, 5 Michaela Leonard, 6 Piper Duck, 7 Ashley Marsters, 8 Siokapesi Palu (capt); 9 Sam Wood, 10 Faitala Moleka, 11 Desiree Miller, 12 Trilleen Pomare, 13 Georgina Friedrichs, 14 Maya Stewart, 15 Caitlyn Halse.
Replacements: 16 Tania Naden, 17 Faliki Pohiva, 18 Bridie O'Gorman, 19 Annabelle Codey, Â 20 Emily Chancellor, 21 Tabua Tuinakauvadra, 22 Tia Hinds, 23 Cecilia Smith.
