Midfielders: Harry Winks (Tottenham Hotspur), Ross Barkley (Chelsea), Jordan Henderson (Liverpool), Nathaniel Chalobah (Watford), Eric Dier (Tottenham Hotspur), James Maddison (Leicester City), Mason Mount (on loan at Derby County from Chelsea).
Discussing his extension, Southgate said: "You can have great relationships with your clubs and I did with mine - I had really special relationships with all three of my clubs - but emotionally the national team has always been the biggest thing for me".
"We've got a few injuries in the midfield in particular - Dele [Alli], Jesse [Lingard] and Ruben [Loftus-Cheek] have been missing - and Fabian Delph, so there is an opportunity there".
Harry Winks, capped once by England, was recalled after starting for Tottenham against Barcelona in the Champions League on Wednesday, while Chelsea's Ross Barkley could win his first cap since a friendly against Australia in May 2016.
Maddison, 21, who has won four England Under-21 caps, was watched by Southgate when he helped the Foxes beat Newcastle United on Saturday.
Maddison has three goals and two assists since making his £24million move from Norwich to Leicester, while Mount has netted three times for Derby.
England lost to Spain 2-1 in its first match in the newly formed Nations League.
Sancho, a gifted wide midfielder who is 17, joined Dortmund from Manchester City a year ago and has broken through this season, scoring one goal and providing seven assists in nine games mostly off the bench.
"To have a player starting in the Champions League is of importance to us", Southgate said.
With England, Sancho has won Federation Internationale de Football Association U-17 World Cup in 2017 the UEFA European Under-17 Championship Golden Player and was part of the Team of the Tournament. He had a year at [Dutch side] Vitesse Arnhem last year so he's had another year of men's football. We think there are some exciting young players that we've been tracking, either through their clubs or our junior teams.
In the 25-man squad, 23 were born in the 1990s.
Only nine have scored for England.
In total, there are six new players in Southgate's latest squad.