Chief selector and head coach Misbah-ul-Haq also recalled three other players — Mohammad Rizwan, Usman Shinwari and Abid Ali — who were not part of Pakistan's World Cup squad.
The 29-year-old Iftikhar played just two ODIs against England in 2015 before being sidelined - mainly by the presence of all-rounders Mohammad Hafeez and Shoaib Malik in the team.
Malik retired from one-day internationals after the World Cup in July, while Hafeez has received permission from the Pakistan Cricket Board to skip the series to play in the Caribbean Premier League.
Nawaz, who also bowls left-arm spin, has impressed selectors with his form in the domestic Pakistan Cup one-day tournament and has been recalled after a year.
Pakistan was forced to make two changes after fast bowlers Shaheen Afridi and Hasan Ali were ruled out due to illness and injury respectively. Afridi is down with dengue fever and Hasan is suffering from back spasms.
Opening batsman Fakhar Zaman has retained his place in the squad despite the left-hander's poor showing during the World Cup.
"No doubt his performance has gone down, but still his average is around 47 in ODIs," Misbah said of Fakhar.
"He's an impact player. He is such a player that if he plays 10 overs, you have a chance to win the match. Instead of wasting him, we should see how we can utilize him in the future."
Wicketkeeper-batsman Mohammad Rizwan, who scored two centuries against Australia in the United Arab Emirates, also returns after being ignored for the World Cup.
Misbah said captain Sarfaraz Ahmed and Rizwan have different roles and the latter could be in the playing eleven as a fielder.
"If someone has scored two hundreds at No. 4 you have to give him a chance," Misbah said.
"You have added advantage of having two wicketkeepers, fitness wise he is very good ... we are trying to encourage such players and we will try to give them matches whenever we have a chance."
Karachi will host the three ODIs on Sept. 27, Sept. 29 and Oct. 2.
The ODI series will be followed by three Twenty20s at Lahore between Oct. 5-9.
Pakistan squad: Sarfaraz Ahmed (captain), Babar Azam, Abid Ali, Asif Ali, Fakhar Zaman, Haris Sohail, Mohammad Hasnain, Iftikhar Ahmed, Imad Wasim, Imam-ul-Haq, Mohammad Amir, Mohammad Nawaz, Mohammad Rizwan, Shadab Khan, Usman Khan Shinwari, Wahab Riaz.