Duffy, who recently spent time with the Black Caps during their test series in India, was named in both the T20 and ODI teams for the series starting on Saturday.
He will join a young pace attack headlined by stalwart Matt Henry, alongside Will O’Rourke, Zak Foulkes and former Otago all-rounder Nathan Smith.
Volts spinner Glen Phillips also remains with the squad after the recent Black Caps test series in India and against England at home.
Auckland batter Bevon Jacobs has earned his maiden call-up for T20 series.
Jacobs’ power hitting has turned heads since he burst on to the domestic scene for Canterbury last summer and continued his form for the Auckland.
It caps off a memorable month for the 22-year-old who was also picked up in last month’s IPL auction to join Trent Boult and Mitchell Santner at the Mumbai Indians.
Jacobs had an early look at Sri Lanka as part of the New Zealand XI in yesterday’s T20 warm-up at Lincoln.
The series marks the start of Mitchell Santner’s tenure as the fulltime white-ball captain.
It is also the first chance for New Zealand fans to see Foulkes, Mitch Hay and Tim Robinson play at home, after the trio made their international debuts overseas during the winter.
Canterbury Kings wicketkeeper-batter Hay has been included in both squads after impressing on last month’s tour to Sri Lanka.
Hay will keep in the T20 series and has been selected as batting and keeping cover for the ODI series when incumbent Tom Latham will join the ODI squad.
Black Caps selector Sam Wells congratulated Jacobs on his maiden call-up.
"It’s obviously an exciting time for Bevon and his family," Wells said.
"He’s a promising player with a lot of talent and we’re looking forward to exposing him to international cricket.
"He’s clearly got a lot of power with the bat, but he’s also shown in the longer formats that he has a decent technique and temperament."
Wells said the squads represented a mix of fresh new talent alongside some proven internationals.
"As with the squads that recently toured Sri Lanka, we’re keen to keep exposing new talent to the big stage and it’s nice to have an experienced core of players around them.
"The Champions Trophy, like all ICC pinnacle events, is an obvious incentive for players and I know many will be keen to put their best foot forward in the ODI series to be in the frame for selection."
The Black Caps will be guided by Luke Ronchi as regular head coach Gary Stead takes a break following an extensive period of cricket for the team.
Ronchi will be supported by regular bowling coach Jacob Oram, and Craig McMillan who will assist with the batting and fielding.
Kane Williamson and Devon Conway were unavailable for selection due to their commitments in the South Africa SA20 competition.
Ben Sears (knee) and Kyle Jamieson (back) were not considered for selection as they continue their rehabilitation from injury.
Black Caps v Sri Lanka
T20 and ODI squads
Mitchell Santner (c), Michael Bracewell, Mark Chapman, Jacob Duffy, Zak Foulkes (T20I only), Mitch Hay, Matt Henry, Bevon Jacobs (T20I only), Tom Latham (ODI only), Daryl Mitchell, Will O’Rourke (ODI only), Glenn Phillips, Rachin Ravindra, Tim Robinson (T20I only), Nathan Smith, Will Young (ODI only).
T20 and ODI draws
T20 draw: Dec 28, Bay Oval 7.15pm; Dec 30, Bay Oval, 7.15pm; Jan 2, Saxton Oval, 1.5pm
ODI draw: January 5, Cello Basin Reserve, 11am; January 8, Seddon Park, 2pm; January 11, Eden Park, 2pm
