Rushdie, who won in 1981 for Midnight's Children, is included for his latest novel, Quichotte. Atwood won in 2000 for The Blind Assassin and is nominated for The Testaments, a follow-up to her 1985 novel, The Handmaid's Tale. This is the sixth time the Canadian novelist has been nominated for the award.
The eight women and five men on the list, which was announced on Wednesday, include Britain's Max Porter for Lanny; Nigerian-British writer Oyinkan Braithwaite for My Sister, the Serial Killer; British-Turkish author Elif Shafak for 10 Minutes 38 Seconds in This Strange World; and Lucy Ellmann, the only American finalist, for Ducks, Newburyport.
"They are all credible winners," said chair of the judges, Peter Florence. "They imagine our world, familiar from news cycle disaster and grievance, with wild humour, deep insight and a keen humanity.
"These writers offer joy and hope. They celebrate the rich complexity of English as a global language. They are exacting, enlightening and entertaining. Really – read all of them."
Literary Director of the Booker Prize Foundation, Gaby Wood, added: "There are familiar names here writing at the height of their powers, there are young writers of exceptional imagination and daring, there is wit, incisive political thought, stillness and thrill. And there is a plurality that shows the making of literature in English to be a global endeavour."
Founded in 1969, the £50,000 (Dh228,000) prize is open to English-language authors from around the world.
The shortlist will be announced on September 3, with the winner revealed at a ceremony in London on October 14.
2019 full Booker Prize longlist
The Testaments by Margaret Atwood (Vintage, Chatto & Windus)
Night Boat to Tangier by Kevin Barry (Canongate)
My Sister, The Serial Killer by Oyinkan Braithwaite (Atlantic Books)
Ducks, Newburyport by Lucy Ellmann (Galley Beggar Press)
Girl, Woman, Other by Bernardine Evaristo (Hamish Hamilton)
The Wall by John Lanchester (Faber & Faber)
The Man Who Saw Everything by Deborah Levy (Hamish Hamilton)
Lost Children Archive by Valeria Luiselli (4th Estate)
An Orchestra of Minorities by Chigozie Obioma (Little, Brown)
Lanny by Max Porter (Faber & Faber)
Quichotte by Salman Rushdie (Jonathan Cape)
10 Minutes 38 Seconds in This Strange World by Elif Shafak (Viking)
Frankissstein by Jeanette Winterson (Jonathan Cape)