In the other change, the injured Andy Powell is replaced by former captain Ryan Jones at No. 8 while wing Morgan Stoddart keeps his place in the back three despite fracturing his hand against Martin Johnson's Red Rose.
Hook has been desperate to stake his claim at fly-half for club and country partly explaining his move from the Ospreys to Top 14 side Perpignan.
However Wales boss Warren Gatland indicated he would not have handed the 25-year-old the opportunity if it was not for the doubts over Jones' fitness.
"James has a real opportunity to show what a quality player he is," said Gatland.
"There is a certain amount of risk involved as he has not started a game at fly-half this season, but the decision was made easier considering Stephen has been limited in what he can do in the early part of this week after the bump he picked up early on against England."
Apart from Powell, there are no further changes in the pack as Wales go in search of their first win in nine games with Gatland receiving a vote of confidence from WRU chief executive Roger Lewis this week.
But while forwards coach Robin McBryde concedes Wales are under pressure to deliver victory at Murrayfield, he has faith his pack can deliver the goods.
He said: "The forwards were in a battle last week, but there were plenty of things that went right and we want them to go up to Murrayfield and give it a shot.
"Our front five was an asset in the autumn and Craig Mitchell has come in and done well and helped give us platform off the scrum and line-out.
"We have talked about better execution and accuracy but largely we want the same again from the forwards with Ryan coming back into the mix as well.
"We know we are under pressure, but the pressure we put on ourselves is more than enough and there is no-one working harder than us to put things right."
Among the replacements Tavis Knoyle replaces scrum-half Dwayne Peel who picked up a knock to his hip in training while Scarlets duo Rhys Priestland and Josh Turnbull will make their debuts if they come off the bench.
15 - Lee Byrne (Ospreys)
14 - Morgan Stoddart (Scarlets)
13 - Jamie Roberts (Blues)
12 - Jonathan Davies (Scarlets)
11 - Shane Williams (Ospreys)
10 - James Hook (Ospreys)
9 - Mike Phillips (Ospreys)
1 - Paul James (Ospreys)
2 - Matthew Rees (Capt, Scarlets)
3 - Craig Mitchell (Ospreys)
4 - Bradley Davies (Blues)
5 - Alun Wyn Jones (Ospreys)
6 - Dan Lydiate (Dragons)
7 - Sam Warburton (Blues)
8 - Ryan Jones (Ospreys)
16 - Richard Hibbard (Ospreys)
17 - John Yapp (Blues)
18 - Jonathan Thomas (Ospreys)
19 - Josh Turnbull (Scarlets)
20 - Tavis Knoyle (Scarlets)
21 - Stephen Jones (Scarlets)
22 - Rhys Priestland (Scarlets)