Walcott, 27, was reported to be in danger of losing his place in recent weeks after struggling to live up to expectations with Arsenal this season. The forward had scored only five goals in 28 Premier League appearances, and he fails to make the cut despite clubmate Danny Welbeck’s absence through injury.
Following the announcement, Walcott wrote on Twitter: “I am of course disappointed not to make the squad, but I have spoken with Roy and respect his decision.
“I wish Roy and all the team the best of luck for a successful Euro’s.”
It had been reported that Rashford would train with the England squad after Welbeck’s injury, but the under-20 international was not thought to be a serious contender for the European Championship given his lack of experience.
Rashford was selected ahead of Sunderland’s Jermain Defoe and West Ham’s Andy Carroll, and Hodgson has said the United youngster is a “contender” to go to the finals.
He now has the chance to prove he is worthy of a place in the final 23-man squad, which must be submitted by May 31, as England take on Turkey and Australia in pre-tournament friendlies before the end of the month.
Jordan Henderson, who made his return from injury as a substitute in Liverpool’s 1-1 draw with West Bromwich Albion on Sunday, has also been named in the provisional squad.
Along with Walcott and Jagielka, Hodgson omitted Manchester United midfielder Michael Carrick and Everton left-back Leighton Baines.
Hodgson explained, “Leighton hasn’t played for us for well over a year. He’s been injured, and it’s good to see him back playing, but in his absence, people like Danny Rose, Ryan Bertrand and Kieran Gibbs have been filling the breach.
“Michael has played a part for us on a regular basis these last two years and been unfortunate himself with injuries. I’ve spoken to all of those players, and they were tough decisions. They’re players that I respect and admire, but you have to make a decision.
“There are only 23 places, and I decided we would rob Peter to pay Paul in the sense of taking seven defenders rather than eight, to give me a chance to take one more player in the midfield and forward section.
“Unfortunately that’s gone out over Phil [Jagielka]. It was a tough conversation, but those are the type of conversations you have to have as a coach, and I’m pleased I was able to speak to him on the phone before this announcement.”
Townsend, who joined Newcastle from Tottenham in January, made his England debut in 2013 and had made a big impact in the early stages of his international career before falling down the pecking order during his struggles at club level.
As a result, Hodgson opted for the 24-year-old ahead of Walcott.
“Andros was unlucky to lose his place in the squad when he wasn’t getting a regular game in the team, but since he’s gone to Newcastle he’s done very well,” he said. “Theo unfortunately over the last few months has not got such a regular game and has had problems with injuries. It’s a tough decision but one you have to take.”
England play Turkey on May 22 and Australia on May 27 before facing Portugal on June 2 after the announcement of the final squad.
Provisional 26-man England squad for Euro 2016
Goalkeepers: Fraser Forster (Southampton), Joe Hart (Manchester City), Tom Heaton (Burnley)
Defenders: Ryan Bertrand (Southampton), Gary Cahill (Chelsea), Nathaniel Clyne (Liverpool), Danny Rose (Tottenham Hotspur), Chris Smalling (Manchester United), John Stones (Everton), Kyle Walker (Tottenham Hotspur)
Midfielders: Dele Alli (Tottenham Hotspur), Ross Barkley (Everton), Fabian Delph (Manchester City), Eric Dier (Tottenham Hotspur), Danny Drinkwater (Leicester City), Jordan Henderson (Liverpool), Adam Lallana (Liverpool), James Milner (Liverpool), Raheem Sterling (Manchester City), Andros Townsend (Newcastle United), Jack Wilshere (Arsenal)
Forwards: Harry Kane (Tottenham Hotspur), Marcus Rashford (Manchester United), Wayne Rooney (Manchester United), Daniel Sturridge (Liverpool), Jamie Vardy (Leicester City)