McFadden has featured in 11 Magners League games this season, starting 10 times and playing the full 80 minutes in his last eight matches.
The former Ireland U19, U21, Universities and A back, who has previously featured for an Ireland side in a non-cap match against the Barbarians, has been chosen on the right wing as Declan Kidney shuffles his back three.
"My heart was beating pretty fast when Declan (Kidney) was calling out the team and thankfully I was on the teamsheet, so I'm over the moon," said McFadden.
"I am sure I'll be nervous coming up to the game, but I am nervous before every game. I am always nervous that I'm going to go out there and not perform to my best. But I think that is the way you have to go out for every game. It's going to be the same this Saturday, it's going to be a big test.
"I feel my progress this season has been quite good and since I got moved to the wing by Joe (Schmidt) with Leinster, I feel like I was doing a job there.
"I was originally with the Wolfhounds last week and I was due to play in that match over in Scotland and then when I heard Shane (Horgan) had a problem with his knee and obviously Andrew (Trimble) had a broken hand and Tommy (Bowe) didn't come through his scan, I suppose there was an opening there, but there's still a lot of good players left.
"The strength in depth in Ireland is one of the add-ons that we have brought into Irish rugby over the last three, probably four years.
"There is still good competition there and I suppose things were looking positive for me in training, but you are still never going to make any presumptions."
Injuries to first and second-choice full backs Rob Kearney and Geordan Murphy see Luke Fitzgerald make his first start in the No15 shirt, with Munster's Keith Earls named on the left wing.
McFadden's Leinster team-mate Mike Ross is set for his first Ireland start after being chosen alongside Cian Healy and Rory Best in the front row.
Ross is only in his first season of Magners League rugby having moved from Harlequins in the summer but the switch is clearly paying off.
Tomas O'Leary wins the battle for the No9 shirt ahead of Eoin Reddan and Peter Stringer despite being left out of Kidney's original Six Nations squad.
With both Stephen Ferris and Jamie Heaslip both out injured, Denis Leamy will start on the blindside flank, with Sean O'Brien at No8.
Ireland are also missing regular starters Tommy Bowe, Andrew Trimble and Jerry Flannery, as well as veteran wing Shane Horgan, although Munster skipper Paul O'Connell will make his first international appearance since the final game of last year's Six Nations.
Ireland (vs Italy, Saturday, Rome, 2.30pm GMT)
15 L Fitzgerald (Leinster)
14 F McFadden (Leinster)
13 B O'Driscoll (Leinster, captain)
12 G D'Arcy (Leinster)
11 K Earls (Munster)
10 J Sexton (Leinster)
9 T O'Leary (Munster)
1 C Healy (Leinster)
2 R Best (Ulster)
3 M Ross (Leinster)
4 D O'Callaghan (Munster)
5 P O'Connell (Munster)
6 D Leamy (Munster)
7 D Wallace (Munster)
8 S O'Brien (Leinster)
Replacements
16 S Cronin (Connacht)
17 T Court (Ulster)
18 L Cullen (Leinster)
19 S Jennings (Leinster)
20 E Reddan (Leinster)
21 R O'Gara (Munster)
22 P Wallace (Ulster)
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