Indian officials had earlier told reporters Ashwin had not recovered from an abdominal strain that has kept him out of the last two Tests, and skipper Virat Kohli had lamented the offspinner's absence, saying he was "very disappointed" to miss the final match of the series.
But barely an hour later, his name was on the squad list tweeted by the BCCI, India's governing body.
"A decision on R Ashwin's availability will be taken on the morning of the Test," it said ahead of what is expected to be turning wicket at the Sydney Cricket Ground.
In a surprise, first-team regular Sharma was not included with the reasons unknown. Fast bowler Umesh Yadav was named as his replacement.
Wrist-spinner Kuldeep Yadav was also on the squad list and could play alongside finger-spinner Ravindra Jadeja if Ashwin is not fit and India opt for two slow bowlers.
Middle-order batsman Rohit Sharma, who hit a gritty 63 in the first innings at Melbourne, is not available after jetting back to Mumbai to be with his wife who recently gave birth.
KL Rahul, who was axed for the last Melbourne Test, is back in contention and could open the innings with Mayank Agarwal, with Hanuma Vihari dropping back down to No.6 as cover for Rohit Sharma.
The Ashwin u-turn was not explained although there was speculation that Jadeja may also not be fully fit.
Kohli had earlier said of Ashwin: "The physio and the trainer have spoken to him in terms of what's required in order to get over that injury.
"He is very disappointed with the fact that he has not been able to recover in time, but the things have been laid out to him (over) what needs to be done to get back to full fitness.
"Honestly, you can't predict an injury, when it happens you just manage and doing what he can to get over that injury."
India go into the final Test 2-1 up and with a first series win in Australia in their sights.
But Kohli insisted making history was not their primary motive.
"The reason why we want to win this Test is because we understand as cricketers how difficult it is to come here and play," he said.
"It's is not only the team you are playing against but the whole nation as they get behind their team so well.
"Purely just to take that challenge on, we want to win here. It's got nothing to do with proving that we have done something that hasn't been done in the past."
India squad: Mayank Agarwal, KL Rahul, Hanuma Vihari, Cheteshwar Pujara, Virat Kohli (capt), Ajinkya Rahane, Rishabh Pant, Ravindra Jadeja, Kuldeep Yadav, Ravichandran Ashwin, Mohammed Shami, Jasprit Bumrah, Umesh Yadav.AFP