Retegui has represented Argentina at under-19 and under-20 level but has never played for the senior side and has Italian citizenship through his maternal grandmother.
"We've been following Retegui for a while, he's been playing regularly in the Argentine league for two seasons. He has qualities that we currently lack," Mancini said.
Lecce goalkeeper Wladimiro Falcone and Torino defender Alessandro Buongiorno were also handed debut callups, while Inter Milan defender Matteo Darmian was named in the Italy squad for the first time in five years.
Mancini, however, faces a headache when it comes to choosing strikers as Ciro Immobile is out injured while Napoli's Giacomo Raspadori and Gianluca Scamacca of West Ham United have lacked playing time.
"Raspadori is an important player for us but he doesn't play much," Mancini said. "Scamacca is coming from an injury and doesn't play much either. The lads can improve only if they play."
Scamacca was included in the squad while Raspadori was left out.
Defending champions Italy play England on Thursday in Naples, less than two years after beating Gareth Southgate's team on penalties in the Euro 2020 final.
The Azzurri then failed to make the World Cup for the second-straight tournament.
Italy also visit Malta on March 26.
Goalkeepers: Gianluigi Donnarumma, Wladimiro Falcone, Alex Meret, Ivan Provedel.
Defenders: Francesco Acerbi, Leonardo Bonucci, Alessandro Buongiorno, Matteo Darmian, Giovanni Di Lorenzo, Federico Dimarco, Alessio Romagnoli, Giorgio Scalvini, Leonardo Spinazzola, Rafael Toloi.
Midfielders: Nicolo Barella, Bryan Cristante, Davide Frattesi, Jorginho, Lorenzo Pellegrini, Matteo Pessina, Sandro Tonali, Marco Verratti.
Forwards: Domenico Berardi, Federico Chiesa, Wilfried Gnonto, Vincenzo Grifo, Simone Pafundi, Matteo Politano, Mateo Retegui, Gianluca Scamacca.
Information from the Associated Press and Reuters was used in this report.