Sanches was considered one of Europe's rising talents after he helped Portugal win the 2016 European Championship.
But the 20-year-old player has struggled since then. He was loaned by Bayern Munich to Swansea this season and made only 12 English Premier League appearances.
Coach Fernando Santos also included midfielder Andre Gomes despite his troubles at Barcelona.
The Portuguese Football Federation says Santos will announce his final 23-man squad on Thursday.
Portugal faces Spain in one of the biggest group match clashes on June 15. Morocco and Iran are also in the same group.
Goalkeepers: Anthony Lopes (Lyon), Beteo (Goztepe), Rui Patricio (Sporting Lisbon).
Defenders: Antunes (Getafe), Bruno Alves (Rangers), Cedric Soares (Southampton), Joao Cancelo (Inter Milan), Jose Fonte (Dalian Yifang), Luis Neto (Fenerbahce), Mario Rui (Naples), Nelson Semedo (Barcelona), Pepe (Besiktas), Raphael Guerreiro (Borussia Dortmund), Ricardo Pereira (FC Porto), Rolando (Marseille), Ruben Dias (Benfica).
Midfielders: Adrien Silva (Leicester), Andre Gomes (Barcelona), Bruno Fernandes (Sporting Lisbon), Joao Mario (West Ham), Joao Moutinho (Monaco), Manuel Fernandes (Lokomotiv), Ruben Neves (Wolverhampton), Sergio Oliveira (FC Porto), William Carvalho (Sporting Lisbon).
Forwards: Andre Silva (AC Milan), Bernardo Silva (Manchester City), Cristiano Ronaldo (Real Madrid), Eder (Lokomotiv), Gelson Martins (Sporting Lisbon), Goncalo Guedes (Valencia), Nani (Lazio), Paulinho (Braga), Ricardo Quaresma (Besiktas), Ronny Lopes (Monaco).