Priestland has been handed the fly-half role for Sunday's World Cup Pool D clash, while a versatile Hook again features at full-back in an exciting unit alongside wings George North and Shane Williams.
"We are trying to get one of our best players on the field in James Hook," said Gatland.
"There was a comment from Gwyn Jones (former Wales captain) a few weeks ago when he said James was probably the best Welsh 10, the best Welsh centre and the best Welsh full-back.
"We were really impressed with Rhys in the first couple of warm-up games (against England), and we felt that combination with James at 15 and having two attacking players at first receiver, with James being able to do that as well, gives us an opportunity.
"Rhys has confidence, he has got a very good balance in his game. He is an effective runner, has a good boot on him and he has that self-belief you look for as a coach."
Priestland, 24, made his Test debut as a replacement against Scotland during last season's RBS 6 Nations Championship, and he has won just four caps.
But Gatland has been impressed with his maturity and composure, which was highlighted by an assured display against England at Twickenham last month.
On that occasion, Priestland moved from full-back to fly-half with barely 10 minutes' notice when Stephen Jones' calf tightened during the warm-up.
Hook, meanwhile, had an outstanding game from full-back in the return England encounter seven days later, contributing 13 points that included a try and two long-range penalties.
Elsewhere, Gatland has sprung a surprise in the second-row, where Newport Gwent Dragons lock Luke Charteris is preferred to Cardiff Blues forward Bradley Davies.
Calf muscle injuries sideline fly-half Stephen Jones, prop Gethin Jenkins and number eight Ryan Jones, while 2009 Lions first Test full-back Lee Byrne does not feature in the matchday 22.
Leigh Halfpenny provides back-three cover off the bench, and Byrne, who had a poor game in Wales' final warm-up fixture against Argentina, misses out completely.
Gatland added: "It was a close call between the second-rows, but I think at the moment Luke is our number one. He played really well against England.
"He's in great shape, and the way he has improved in the last few months has been outstanding.
"In the past he has had injuries and hasn't always been able to take a full part in training, and it has been difficult for us to select him.
"But I think he has missed one session in two months. We have been really impressed with him."
Jenkins and Stephen Jones are set to resume training next week, but the immediate outlook for former Wales skipper Ryan Jones does not appear so bright.
"We just want to see how Sunday goes," said Gatland. "Hopefully, we don't pick up any injuries.
"We have got to give that injury (Jones') a bit more time to settle.
"It is a long tournament, and we've got to make sure we make the right decision there. Can we give him enough time?
"If we pick up injuries on Sunday, that may change our thinking, so we are going to wait and see what happens."
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