The 22-year-old Reds player replaces O'Connor, who has been ruled out due to a hamstring injury sustained during a running drill.
Davies joins fellow Wallabies debutants Nick Phipps of the Melbourne Rebels and Waratah Sitaleki Timani in the side, while the Reds pair of flanker Beau Robinson and hooker James Hanson will gain their first taste of Test rugby if required from the bench.
The full extent of O'Connor's injury is still to be determined, with medical staff to monitor it over the next few days. He has no previous history of hamstring injuries.
In the absence of O'Connor, Brumbies fly-half Matt Giteau will assume goal-kicking responsibilities.
Earlier in the week, Waratahs prop Benn Robinson was ruled out for the season after he sustained an injury to the anterior cruciate ligament in his knee. His injury saw Western Force prop Pekahou Cowan added to the squad, taking his place among the run-on reserves.
Australia: Mark Gerrard; Rod Davies, Adam Ashley Cooper, Pat McCabe, Digby Ioane, Matt Giteau, Nick Phipps; Sekope Kepu, Stephen Moore, Ben Alexander, Sitaleki Timani, Nathan Sharpe, Rocky Elsom (capt), Matt Hodgson, Ben McCalman.
Run-on reserves: James Hanson, Pekahou Cowan, Dan Vickerman, Scott Higginbotham, Beau Robinson, Will Genia, Kurtley Beale.
Gilbert has released a new line of rugby cleats. The Gilbert Virtuo 8S is part of the exciting new product. Check it out.
The entire All Blacks apparel line has been updated for 2013/14. Check out the New Zealand All Blacks polo.
The Nike Tiempo is a solid rugby cleat and one of few styles still made from full-grain natural leather.
The Gilbert Blitz 8S rugby cleat is a great cleat at a great price of $69.99. Get a new pair of cleats today.
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Wear the crest of the British and Irish Lions on your t-shirt. A great look for the summer.
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The All Blacks Performance t-shirt is black with hints of blue from the training jersey. Very Cool.
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The USA Rugby Pro Alternate rugby jersey is perfect for any fan of the Eagles. Get yours to wear during the summer Test matches.
The NEW All Blacks 2013/14 jersey has arrived at World Rugby Shop. Dare to wear the colors of the All Blacks.
