It will be the last season for the Sunwolves after the Japan Rugby Union and tournament organisers failed to reach agreement on their continued involvement.
Te'o, 32, born in New Zealand and a Samoan rugby league Test player before qualifying for England and playing 20 Tests, won a place in the 2017 British & Irish Lions team that toured New Zealand but missed out on a place in England's World Cup side.
He had played for Worcester but ended his connection with them after three years of injury issues.
He then joined Toulon before signing with the Sunwolves, one of 14 foreign-born players in their initial 15-man squad named on Tuesday. As a result of his move Te'o has ruled himself out of consideration for England.
Joining him in the side will be Australian No 8 Jake Schatz, who has made 92 Super Rugby appearances, mainly for the Reds, and Georgian hooker Jaba Bregvadze, who has been with the side for the last two seasons, returns.
The Sunwolves have struggled since joining the competition in 2016, winning only eight of their 62 games.
But Japan coach Jamie Joseph rated the opportunity their participation had provided for top Japanese players to play with and against overseas stars.
Joseph told the Japan Times: "For our national team to keep on challenging the next level of rugby, we need to develop the next generation of Japanese players and work hard together.
"Only then can we capitalise on all the hard work that has been done in the past four years. The challenge starts now," he said.
The only Japanese player named in the squad so far is halfback Naoto Saito, 22, who plays for the Waseda University side.
Delays in completing the squad have been the result of World Cup representatives being both physically and mentally exhausted.
In the wake of the World Cup, the Japanese domestic season and their Top League have been scheduled to start in January and will end in May.
As a result of the World Cup having made it more difficult to acquire players, Sunwolves chief executive Yuji Watase said it was likely they would look to sign younger players with a view to building them up ahead of the 2023 World Cup.
The new Sunwolves head coach Naoya Okubo said he hadn't expected that the Rugby World Cup would cause the excitement that it did in Japan.
"We need to take another first step toward the next World Cup and beyond. And the first step will be the Sunwolves," he said.