Captain Alastair Cook confirmed that 19-year-old Hameed would become his latest opening partner at a press conference ahead of the first Test.
Ben Duckett is set to drop down to number four in place of Yorkshire batmsan Ballance, who struggled for runs in the two-match series in Bangladesh.
Ballance has featured in 21 Tests for England, scoring four centuries and a total of 1,413 runs.
However, the 26-year-old failed to make double figures in four innings in the drawn series in Bangladesh as his Test average dipped under 40.
His last Test match century came against West Indies in April 2015, which preceded a string of poor performances with the bat against New Zealand and Australia.
Cook said: “Has is going to open the batting and Ben is going to bat at four.
“It’s unfortunate for Gary (Ballance). In his six Test matches back, he hasn’t quite scored the runs he would have liked to.
“It has given someone else an opportunity and it’s a very exciting day for a young guy who has impressed everyone so far on this trip.
“You often wonder with a 19-year-old coming on tour whether he will be overawed by it - and he hasn’t been at all.”
Cook also played down reports that he is considering his future as Test captain.
The 31-year-old is set to lead England for a record 54th time in the first Test, breaking Michael Atherton’s record as captain, during which time he has twice won the Ashes.
Cook suggested, however, in an interview with The Cricketer magazine that his appetite for the job may be diminishing, saying : “Deep down I don’t know how much longer I am going to carry on.
“It could be two months, it could be a year.
“I do look forward to the day when hopefully I can play a Test match as just a batter, there’s no doubt about that.
“If that happens I am going to really enjoy standing at first slip and being the bloke who makes suggestions to whoever’s in charge and not being the bloke who has to make the final decision.
“It makes me feel very satisfied that I’ve been able to do it for a long period of time and I’ve had a really good crack at it.
“There have been some tough moments and amazing moments and you can enjoy that success that little bit more because of what you go through as England captain.”