Byrne, who made two appearances on the tour of New Zealand in the summer, has lost out to Ulster's Rory Best and Munster's Jerry Flannery for hooking duties.
Munster openside flanker David Wallace, who last started a game for Ireland in the second Test against Japan during the summer tour in June 2005, has been included in the 22-man party named by coach Eddie O'Sullivan for the match at Lansdowne Road.
Wallace could displace Johnny O'Connor at number seven, while Wasps scrum-half Eoin Reddan is the only uncapped player in the squad.
O'Sullivan said: "There were some very hard calls made to reduce the squad to our match 22, but as always we have gone with the players in form at this time.
"With the performances of the provinces in European competition last weekend, there is certainly a good positive feeling in the camp, but the players and staff are well aware of the challenge that Italy will represent next weekend.
"The game is certainly going to be a tough opening test as it was last year."
Coach O'Sullivan revealed his decision to pick Best and Flannery ahead of Byrne was based on form.
He said: "There were some difficult decisions to make. The good news is we've got the form guys in there.
"Some of them are very young and exciting players who have forced their way into the squad.
"Shane has been left out on form. Both Rory and Jerry have been playing Heineken Cup rugby and have been playing very well.
"Jerry has burst onto the scene and has carried the mantle at hooker for Munster. He has gone from strength to strength.
"Rory was in the squad during November. I'm purely picking the players on form."
Ireland squad to face Italy at Lansdowne Road on February 4:
Backs: T Bowe (Ulster), G D'Arcy (Leinster), S Horgan (Leinster), D Humphreys (Ulster), G Murphy (Leicester), B O'Driscoll (Leinster), R O'Gara (Munster), E Reddan (Wasps), P Stringer (Munster), A Trimble (Ulster).
Forwards: R Best (Ulster), S Best (Ulster), S Easterby (Llanelli), J Flannery (Munster), J Hayes (Munster), M Horan (Munster), D Leamy (Munster), D O'Callaghan (Munster), P O'Connell (Munster), J O'Connor (Wasps), M O'Kelly (Leinster), D Wallace (Munster)