Batsmen Sohaib Maqsood and Muhammad Rizwan have also not been included in the 15-member squad for the two T20 events in Bangladesh and India.
The selectors, meanwhile, have inducted uncapped left arm pacer Rumman Raees and rookie allrounder Muhammad Nawaz, besides recalling Test opener Khurrum Manzoor, who has never played in a T20 international for Pakistan.
The exclusion of Shehzad, Maqsood and Rizwan -- all batsmen -- was expected as they had been struggling in recent matches.
"There were also some issues with the fitness of tall left arm pacer Muhammad Irfan also," a source said.
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Chief selector Haroon Rasheed, in a statement, said that while picking the squad the team management and skipper Shahid Afridi were consulted.
"The T20 squad has been selected keeping in mind the conditions during Asia Cup and World T20 and the recent performances of some players in domestic and A team tours. The team is a fine blend of experience and youth and the selectors believe the team will do well in both tournaments," Rasheed said.
Nawaz, a left arm spinner and left handed batsman, has already snapped up two man of the match awards in the ongoing Pakistan Super League in Dubai.
Pakistan's former fast bowler Shoaib Akhtar said he was upset at the ouster of Umar Gul but admitted that the pacer had been struggling with fitness issues for a while now.
"I am sad for him but he has not been his old self. But I am happy that Nawaz has finally got recognition for his consistent performances," Akhtar said.
Pakistan squad: Shahid Afridi (Capt), Khurrum Manzoor, Muhammad Hafeez, Shoaib Malik, Umar Akmal, Sarfaraz Ahmed, Babar Azam, Ifthikar Ahmed, Emad Wasim, Anwar Ali, Muhammad Irfan, Wahab Riaz, Muhammad Aamir, Muhammad Nawaz, Rumman Raees.