The 31-year-old last represented his country in the 1999 World Cup quarter-final defeat by South Africa in Paris - his 23rd cap. He has never made a 6 Nations appearance.
But Grayson has every chance of featuring against the Scots, especially if England wrap things up inside the distance and Woodward feels he can take off playmaker Jonny Wilkinson.
"It's great to have Paul Grayson back," said head coach Woodward. "He has been pushing very hard for selection and is there on merit.
"I can't speak highly enough of him. I watched him play for Northampton against Bath last Saturday and he was fantastic.
"He also had a great game for England A against France A last month and I am very happy that he's back with us."
Grayson made his Test debut during Jack Rowell's England regime in 1995, and is third on his country's all-time international points chart with 310, behind Wilkinson (628) and Rob Andrew (396).
He has recently enjoyed a career resurgence following Wayne Smith's appointment as Northampton coach, helping steer Saints into next month's Powergen Cup final against Gloucester and a Heineken Cup quarter-final clash against Toulouse seven days later.
Woodward welcomes back five established international players - all Lions - as England seek the victory which would leave them poised for yet another Grand Slam tilt.
Martin Johnson, Jason Leonard, Neil Back, Jason Robinson and Ben Cohen - a colossal 266 caps between them - return to Woodward's starting line-up against Scotland, with England seeking their 21st successive Twickenham Test-match triumph.