The 25-year-old Preston could become New Zealand's eighth debutant of 2025, continuing a breakout season that began with a hat-trick on his Super Rugby debut for the Canterbury Crusaders.
His selection comes as Finlay Christie earns the number nine jersey in place of Cortez Ratima, who has been ruled out with a rib fracture.
"All of our debutants this year have earned their shot, and Kyle’s no different,” head coach Scott Robertson said in a New Zealand Rugby statement on Thursday.
"He’s a smart, composed halfback who backs himself and drives the game. That’s what we’ll need against a side like South Africa."
In the forwards, Wallace Sititi starts at number eight with Simon Parker moving to the blindside, shifting Tupou Vaa’i back to lock.
Prop Tyrel Lomax is also back in the match-day 23 with a spot on the bench after recovering from a hand injury.
Loose forward Ardie Savea will become the team’s 15th Test centurion starting at openside flanker.
"Ardie embodies everything that makes an All Black,” Robertson said.
"His passion, his leadership, his 'mana' - we’ll be playing for him this weekend."
Emoni Narawa replaces Sevu Reece on the right wing.
The All Blacks are top of the Rugby Championship table ahead of fourth-placed South Africa but the hosts are under pressure after losing their first match to the Pumas in Argentina with a 29-23 setback in Buenos Aires in the previous test.
South Africa coach Rassie Erasmus will name his squad later on Thursday.
The Springboks were back to winning ways against Australia in Cape Town last week after a shock loss to the Wallabies at Ellis Park.
New Zealand team v South Africa:
15-Will Jordan, 14-Emoni Narawa, 13-Billy Proctor, 12-Jordie Barrett (vice-captain), 11-Rieko Ioane, 10-Beauden Barrett, 9-Finlay Christie
8-Wallace Sititi, 7-Ardie Savea (vice-captain), 6-Simon Parker, 5-Tupou Vaa’i, 4-Scott Barrett (captain), 3-Fletcher Newell, 2-Codie Taylor, 1-Ethan de Groot
Replacements: 16-Samisoni Taukei’aho, 17-Tamaiti Williams, 18-Tyrel Lomax, 19-Fabian Holland, 20-Du’Plessis Kirifi, 21-Kyle Preston*, 22-Quinn Tupaea, 23-Damian McKenzie