Diacre, who named her players live on the main TF1 television channel, said it had been a difficult but considered decision not to include the 20-year-old, who has scored 22 league goals.
"Marie-Antoinette has enormous potential. She's young now and she's still got her life ahead of her," said Diacre, who has been critical of Katoto's international performances.
"The French team is going to have amazing experiences in the years to come. In my opinion, she was lacking something, and others showed a little bit more (potential). And so I made a hard choice, I know."
Guingamp striker Emelyne Laurent got the nod instead for the tournament, which will run from June 7th-July 7th.
France play the opening game of the nine-city tournament against South Korea at PSG's home Parc des Princes stadium.
French champions Lyon, who face Barcelona in the women's UEFA Champions League final on May 18, provided the most players with seven of the 23.
Two foreign-based players also feature, with Arsenal goalkeeper Pauline Peyraid-Magnin and Atletico Madrid defender Aissatou Tounkara.
Current captain and midfielder Amandine Henry returns along with fellow midfielder Gaetane Thiney, the second-highest French goalscorer in the 2015 World Cup held in Canada.
Eight other players are also returning from the previous World Cup, including attackers Eugenie Le Sommer and Kaddiatou Diani, defenders Wendie Renard and Amel Majri, and goalkeeper Sarah Bouhaddi.
The national men's team won the World Cup for the second time in Russia last year. The women are fourth in the FIFA rankings, behind reigning champions the United States, Germany and England.
"We've still got a month of preparation before kick-off, but very honestly, the girls I've picked tonight really deserve to be there," Diacre said.
Goalkeepers: Sarah Bouhaddi (Lyon), Solene Durand (Guingamp), Pauline Peyraud-Magnin (Arsenal).
Defenders: Julie Debever (Guingamp), Sakina Karchaoui (Montpellier), Amel Majri (Lyon), Gridge Mbock Bathy Nka (Lyon), Eve Perisset (Paris St Germain), Wendie Renard (Lyon), Marion Torrent (Montpellier), Aissatou Tounkara (Atletico Madrid).
Midfielders: Charlotte Bilbault (Paris FC), Elise Bussaglia (Dijon), Maeva Clemaron (Fluery), Onema Grace Geyoro (Paris St germain), Amandine Henry (Lyon), Gaetane Thiney (Paris FC).
Forwards: Viviane Asseyi (Bordeaux), Delphine Cascarino (Lyon), Kadidiatou Diani (Paris St Germain), Valerie Gauvin (Montpellier), Emelyne Laurent (Guingamp), Eugenie Le Sommer (Lyon).
