Horan, whose last cap was against France in November 1993 before he suffered a serious knee injury in last year's Super 10, resumes his partnership with Jason Little.
The 19-year-old wing Joe Roff wins his first cap in place of Damian Smith, Matt Burke replaces the full-back Matthew Pini and Peter Slattery comes in for George Gregan at scrum-half.
The pack is similarly revamped. The props Tony Daly and Mark Hartill replace Dan Crowley and Ewen McKenzie, Warwick Waugh takes over from Rod McCall at lock and Ilie Tabua and Troy Coker will move into the back row in place of David Wilson and Tim Gavin.
These changes mean that after two games only two members of the Australian party, the fly-half Scott Bowen and the hooker Michael Foley, will still be awaiting their first outing.
Meanwhile, the Springbok winger Pieter Hendriks has confessed that he did not actually touch down his side's first try at Newlands. Hendriks powered past the embattled Australian wing David Campese, but said yesterday: "I did not put the ball down because I was looking to get closer to the posts to make the conversion easier."
The Tongan forward Feleti Mahoni, who became the first player to be sent off at this World Cup, will see no further action after being suspended for six weeks.
The 22-year-old, the fifth player to have been dismissed in a World Cup, earned his red card for stamping on the Frenchman, Philippe Benetton, in Friday's Pool D game.
The incident was arguably crucial in the game's outcome - France, 9- 3 ahead at the time, went on to win 38-10. Tonga have declined to appeal.
Australia (v Canada, 31 May, Port Elizabeth): M Burke; D Campese, J Little, T Horan, J Roff; M Lynagh (capt), P Slattery; T Daly, P Kearns, M Hartill, W Waugh, J Eales, W Ofahengaue, I Tabua, T Coker.
World Cup diary, page 4Reuse content