Daly is one of six changes to the starting 15 announced by coach Steve Borthwick on Wednesday following last week's 33-19 win over New Zealand, with the experienced back replacing injured wing Tom Roebuck.
Daly, a veteran of 73 Tests for England, broke his arm against Queensland Reds in Brisbane in July, when he was in prime form and making a case to be included in the Test side.
The 33-year-old, whose injury required the insertion of a plate containing multiple screws, has not played for Saracens or England since, but was cleared by a specialist to return to full-contact training early last week.
Borthwick has been forced to reshuffle his back line for the game against Argentina at Twickenham, with centre Ollie Lawrence, a try-scorer against New Zealand, and Tommy Freeman both sidelined by hamstring trouble.
The experienced Henry Slade takes Lawrence's place, the Exeter centre partnering Fraser Dingwall in midfield. Ben Spencer starts at scrum-half instead of the benched Alex Mitchell.
Luke Cowan-Dickie comes in for the injured Jamie George at hooker as part of a new front row, together with Ellis Genge and Asher Opoku-Fordjour.
Argentina, who came from 21-0 down to beat Scotland 33-24 at Murrayfield last weekend, are due to name their side on Friday.
The Pumas defeated both New Zealand and Australia in this season's Rugby Championship.
England, who twice won away to Argentina in July, are bidding to extend their winning streak to 11 games.
"Last weekend gave us plenty to build on, and now the challenge is to push our performance further," said Borthwick.
"Argentina play with emotion and physicality, and they've shown they can beat the best in world rugby this year. We know how dangerous they can be, and we are preparing for a fiercely contested Test match."
England (15-1)
Freddie Steward; Immanuel Feyi-Waboso, Henry Slade, Fraser Dingwall, Elliot Daly; George Ford, Ben Spencer; Ben Earl, Sam Underhill, Guy Pepper; Alex Coles, Maro Itoje (capt); Asher Opoku-Fordjour, Luke Cowan-Dickie, Ellis Genge
Replacements: Theo Dan, Fin Baxter, Will Stuart, Charlie Ewels, Tom Curry, Henry Pollock, Alex Mitchell, Marcus Smith
Coach: Steve Borthwick (ENG)