Nadal boasts 22 Grand Slam victories, including a record 14 French Open titles, but only returned to competition last April after missing the best part of 16 months through injury and is currently ranked 264 in the world.
In addition to the singles tournament, Alcaraz, 21, and Nadal, 38, may also take part in the Games’ doubles event.
The Spanish men’s squad is completed by world number 32 Alejandro Davidovich Fokina, Pablo Carreno Busta and number two-ranked doubles player Marcel Granollers.
On the women’s side, Spanish number one Sara Sorribes and world number 67 Cristina Bucsa have been included in the team.
Injury-plagued former world number two Paula Badosa — now ranked 118 — will not be included in the squad for Paris.
“We have the chance of winning two or three medals (at the Olympics),” said RFET president Miguel Diaz Roman.
All national federations must produce their final list for the Games by June 19 at the latest.