Number eight Palu, who has not played for the Wallabies since the June internationals against Wales when he suffered an injury to nerves in his shoulder, was named on Tuesday to start against the All Blacks.
Utility back Adam Ashley-Cooper has also been recalled after he was knocked unconscious in the Wallabies' Rugby Championship clash with South Africa last month.
"Adam has been cleared after the head knock he suffered in Pretoria," Australia coach Robbie Deans said. "He brings with him all-round skill but also a lot of voice in terms of on-field communication, which will be important with a lot of younger players around him."
Winger Drew Mitchell was named on the replacements' bench after recovering from an ankle injury he sustained against New Zealand at Eden Park in August.
The All Blacks won that game to retain the Bledisloe Cup and are seeking their 17th successive Test victory which would equal the record for top tier rugby nations.
Deans's team were the last side to beat the All Blacks, at Lang Park, less than two weeks before the start of last year's World Cup.
"The All Blacks are the benchmark and proved it again through the Rugby Championship," Deans said of the world champions' run.
"They are a step up from where we've been, but the guys have shown a lot of resilience over the last two months, and they're excited about the opportunity ahead of them on the weekend."
Australia: 15-Mike Harris, 14-Nick Cummins, 13-Ben Tapuai, 12-Pat McCabe, 11-Adam Ashley-Cooper, 10-Kurtley Beale, 9-Nick Phipps, 8-Wycliff Palu, 7-Michael Hooper, 6-Scott Higginbotham, 5-Nathan Sharpe (captain), 4-Sitaleki Timani, 3-Ben Alexander, 2-Tatafu Polota Nau, 1-Benn Robinson
Replacements: 16-Saia Fainga'a, 17-James Slipper, 18-Kane Douglas, 19-Dave Dennis, 20-Liam Gill, 21-Brett Sheehan, 22-Drew Mitchell
- Sports & Recreation