The Cardiff Blues hooker will win his eighth cap in what will be his first appearance since featuring on Wales' victorious 2009 summer tour of Canada and USA.
Williams joins British and Irish Lions props Gethin Jenkins (Blues) and Adam Jones (Ospreys) in the front row - Scarlets hooker Matthew Rees ruled out with the recurrence of a groin problem.
In the second row Dragons lock Luke Charteris partners Osprey Alun-Wyn Jones and the ever present back row unit of Blues pair Andy Powell and Martyn Williams and Ospreys No8 Ryan Jones (Captain) is retained.
Blues scrum half Gareth Cooper partners Scarlet Stephen Jones at half-back and a new centre partnership of Jamie Roberts (Blues) and James Hook (Ospreys) is selected in midfield, with the versatile Hook featuring at outside centre for the first time in an international jersey after previously representing his country at full back, fly half and inside centre during his 37-cap career.
On the wings Blues speedster Tom James gets the nod and partners Osprey Shane Williams on the day he wins his 69th cap, with fellow Osprey Lee Byrne now cleared to play and returning at full back.
On the bench Richie Rees could make his international debut (as Wales' 1072nd international) as he provides cover for his regional team-mate Cooper, with Ospreys centre Andrew Bishop and Blues wing Leigh Halfpenny providing the rest of the cover in the backs.
Ospreys pair Huw Bennett and Paul James provide front row cover with regional team-mate Jonathan Thomas covering the rest of the pack alongside Blues second row Bradley Davies.
"Gareth Williams has been in great form for his region and produced some impressive performances in recent weeks and very much deserves his chance," said Gatland.
"We are obviously disappointed for Matthew but he returned to us with a sore groin after playing at the weekend and he has not responded as quickly as we would have like to treatment which has ruled him out of this weekend.
"Gareth is surrounded by a wealth of experience not just in the front row but throughout the forwards, we have a pretty settled pack at the moment with our captain playing particularly well at No8 for the Ospreys and Andy Powell settling into the blindside role with some great performances for the Blues.
"Andy is looking comfortable there, in his last couple of performances for the Blues he has been error free and very strong and we are looking for him to keep that up at international level.
"It's a big game for the second rows not just because of the standard of the opposition we are up against but also because we have a number of players competing for a starting spot in that position at the moment and we are looking for the likes of Luke Charteris to really nail his performance.
"Through the whole squad we are looking for the players to step up on Saturday, we have ten players in the starting line-up who were with the Lions in South Africa in the summer and now is the time for those individuals to show the confidence and leadership qualities which that trip produced."
Gatland's fellow Lions assistant coach and Wales attack coach Rob Howley welcomed the news of Lee Byrne's availability after his recent appeal hearing in Glasgow: "Over the last 10 days or so we have run with two different teams with both Lee and James Hook taking a turn at full-back, but you have to respect the professionalism of both players and indeed of the whole squad," said Howley.
"We have not let the doubt over Lee's availability disrupt things, but it was always going to be a boost to be able to name the first choice Lions full back in the side.
"There are obvious repercussions throughout the backline too as we have been able to select James hook at centre in partnership with Jamie Roberts.
"We tried Jamie at outside centre in the Autumn mainly due to injury problems elsewhere in the squad, but he is back in his preferred position and we are excited about seeing James in this new international role as well.
"James has the skill set to play in a variety of positions and you sometimes feel like you just have to find a role for him, but we think we may have found his position."
WALES: Lee Byrne; Tom James, James Hook, Jamie Roberts, Shane Williams; Stephen Jones, Gareth Cooper; Gethin Jenkins, Gareth Williams, Adam Jones, Alun-Wyn Jones, Luke Charteris, Andy Powell, Martyn Williams, Ryan Jones (captain)
Replacements: Huw Bennett, Paul James, Bradley Davies, Jonathan Thomas, Richie Rees, Andrew Bishop, Leigh Halfpenny