Magnussen, 25, missed out on the 34-strong squad announced in April after he failed to finish in the top two places in the 50m and 100m at the Australian swimming trials.
But he and fellow London Olympian James Roberts, 25, were named along with Games debutant Matt Abood, 29, after Australia's spot in the relay event in Brazil was confirmed when the qualification period ended on May 31.
Magnussen, who was pipped by just one-hundredths of a second for the 100m freestyle gold medal in London, had shoulder surgery in 2015 and said he was feeling stronger by the week in the lead-up to Rio.
He finished fourth in the 100m freestyle at the Australian trials behind Cameron McEvoy, Kyle Chalmers and Roberts. Abood finished fifth.
"I'm really looking forward to contributing to this relay team to the best of my ability," Magnussen said in a statement.
"I love swimming in relays and think this team has a lot of talent and potential."
Magnussen, dubbed "The Missile", and Roberts were part of the relay team which finished a disappointing fourth at the 2012 London Games.
