Lancaster has shifted the Leicester three-quarter from outside centre for Saturday's second Test against South Africa in Johannesburg.
The move was not unexpected with Brad Barritt injured and Jonathan Joseph earning his anticipated full debut at 13, but Tuilagi will have to adapt quickly to different responsibilities to help England level the series.
Lancaster said: "Clearly he's got a different role to play, both defensively and in attack.
"At 13, we wanted to get him across the gainline but didn't quite achieve that last week, I felt.
"We're moving him a bit closer in to the set-piece and obviously there are one or two areas we can use him there, clearly in attack, and defensively as well.
"It's a different job defending at 12 so we've done a lot of work to make sure he's ready for it.
"Manu has some experience at 12. He hasn't played all of his rugby there by any stretch of the imagination, but certainly we're confident in the work we've done and his understanding of the game.
"In the centre partnership, when he played at 13 he would often end up carrying the ball in that 12 channel, so we're comfortable with what Manu's rugby pedigree gives him and what he can offer the team."
Tuilagi's move is one of five changes, both positional and of personnel that Lancaster has made for the clash at Johannesburg's Coca-Cola Park.
Ben Foden reverts from wing to full-back following injury to Mike Brown with David Strettle taking his place on the left flank.
Joseph takes the place of Barritt on the teamsheet while the one unforced change sees Toby Flood replace Owen Farrell at fly-half.
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