Former Leinster flanker Elsom has been the Australian skipper since October 2009 but spent most of last season on the sidelines due to two separate injury setbacks.
Having been out of action for six months thanks to a chronic hamstring injury picked up at the end of 2010, Elsom then damaged an ankle playing for the Brumbies in his comeback game in May and didn't play any further rugby until the Wallabies' defeat to Samoa at the end of July.
That lack of game time, together with a mixed record during his 20-month stint in charge, has led head coach Robbie Deans to seek an alternative route ahead of the global gathering in New Zealand next month and the clash with the Lions in 2013.
"It has become clear that the additional responsibility has been a distraction that Rocky doesn't need," said Deans, who this week signed a new contract that will see him remain in charge for the Lions series and beyond.
"It is well documented that Rocky came into the Test season off a limited background in terms of preparation, having missed all but 60 minutes of Super Rugby due to injury.
"Rocky will remain a very important person within the group. When the proposal for the adjustments of the leadership was put to him, his immediate and impressive response was 'whatever's in the best interests of the team'."
"Obviously it wouldn't have been his preference, but I guess it was made easier by his response. I think you'll see an impressive Rocky Elsom in the next few weeks. He can now really concentrate on getting himself in the right shape without having any peripheral demands, because there are a lot of peripheral demands around the captaincy.
"We all felt it was in the best interests, both of Rocky and of the team, to relieve him of the extra duties, with James's recent experience making him the best option to take over in the role."
Those sentiments surrounding the 'one for all and all for one' ethos within the current Wallaby set up were echoed by Elsom himself after Deans disclosed his 30-man World Cup squad earlier today.
Elsom was made aware of the decision on Monday but he and his coach chose not to break the change in direction to the rest of the Wallaby camp until just before the photo call for the squad announcement.
"It's the way it goes. I mean, it's in the nature of the sport, you're always up for selection," said Elsom.
"We all want the same thing now so it's all heading towards that. I think it's important that everyone gets behind the captain, it can be a difficult job at times and you need everyone right behind you there.
"James doesn't make that decision [to be captain] himself; that's thrust upon him and he needs to be supported. Supporting James is a big thing to focus on."
Rocky Elsom is no longer the Australian skipper
As for Horwill, the 26-year-old still looked surprised by his sudden rise at the media briefing that accompanied the squad announcement.
The 6ft 7in star didn't even make the World Cup squad last time out in 2007 having only been handed his international debut earlier that year. But since becoming a regular member of the first-choice XV in 2008, Horwill has begun every game for which he has been available and was the only player to start all of his country's 14 Test matches two seasons ago.
Injury saw him miss the entire international season in 2010 but he bounced back in fine style by leading the Reds to the inaugural Super 15 title last month and was the obvious candidate for the captaincy once Deans had decided that the burden was weighing too heavily on Elsom's shoulders.
Thursday's announcement has capped a remarkable turnaround for the affable Queensland born and raised lock who will become Australia's 77th captain when he leads the team out for the final Tri Nations encounter against New Zealand on August 27.
"It's been one hell of a ride for me personally," added Horwill.
"The success I've been a part of with the Reds was a massive thrill and a massive honour for me.
"And then to get back into the Wallabies side, which was an aim of mine at the start of the year, and now to be captain going into the World Cup... when you say it like that, I'm just shocked and incredibly honoured to have the opportunity.
"I didn't know what to think. I think I sat there for 10 to 15 seconds not saying anything because I didn't know what to think. After that, I said I'd love the opportunity and it's something I'm really, really looking forward to."
James Horwill will lead the Wallabies at the World Cup
With much media talk surrounding Elsom's demotion, Horwill has been quick to praise his predecessor's leadership qualities and has insisted that his team-mate will still have a major role to play in proceedings.
Horwill intends to seek Elsom's advice both on and off the field as he attempts to continue the Brumbies back rower's mantra of leading by example and attempting to set the standards which others will follow.
"Rocky and me are good friends and have been good friends for a long time," added Horwill.
"He's someone I respect immensely and someone whose leadership skills I can definitely learn from.
"Rocky's a guy who doesn't speak unnecessarily and when he talks, the whole group listens. That's just one of many things that I've learnt from him.
"I'm going to need him to help me, because it's not one man's job, it's the whole group as a whole."