Her tale, set in the suburban streets of Calcutta of the 1960s and told through the eyes of brothers Subhash and Udayan in The Lowland, will compete alongside five other works of fiction for the coveted literary award worth 50,000 pounds.
Born in London and based in New York, Lahiri, 46, is the daughter of Indian immigrants from West Bengal.
She is also a member of United States President Barack Obama's Committee on the Arts and Humanities.
She won the 2000 Pulitzer Prize for Fiction with her debut short story collection Interpreter of Maladies (1999) and her first novel The Namesake (2003) was adapted into a popular film of the same name by filmmaker Mira Nair.
Her writing is rooted in the Indian milieu and attempts to capture dislocation and ambivalence with a unique play of words.
The Lowland, released in September, is already being pitched as an easy front-runner among literary circles.
Birmingham-based Jim Crace is also being touted as among the 2013 favourites for Harvest, a novel about the fragile social eco-system of a remote English village, which the author has claimed will be his last.
Like Crace, Colm Toibin is also a previous nominee and is leading the list with The Testament Of Mary -- about the mother of Jesus grieving angrily years after her son's crucification.
If it wins, it will be the shortest novel to win the Booker, with just 104 pages.
Eleanor Catton, 28, is the youngest to make the cut with her book The Luminaries, while Ruth Ozeki with A Tale For The Time Being and NoViolet Bulawayo We Need New Names complete this year's selection.
Robert Macfarlane, chair of the judges, said the shortlist was "instantly striking because of its global range".
"It shows the English language novel to be a form of world literature," he said.
"We looked for books that sought to extend the power and possibility of the form. This is in keeping with the history of the novel. We wanted novel novels," he added.
Each of the six short-listed writers will receive 2,500 pounds and a hand-bound edition of their book.