The Manchester City and Manchester United stars - both integral players in previous tournaments for Southgate - became the most notable casualties after it was revealed James Maddison and Curtis Jones had both left the squad.
Burnley's James Trafford, Liverpool's Jarell Quansah and Everton's Jarrad Branthwaite also miss out.
Grealish's lack of form for Manchester City in the 2023/24 season likely contributed to his exclusion.
The 28-year-old managed just three goals in 36 appearances across all competitions. While he was a regular under Southgate previously, his recent struggles for form and fitness appear to have proved costly.
Maguire, meanwhile, has been a key player for England under Southgate in the past three major tournaments, often selected on merit rather than seemingly on his club form.
However, a calf injury has kept him sidelined since April, raising doubts about the centre-back's fitness.
"All the players took the news really respectfully," Southgate told a press conference at Tottenham Hotspur's training complex on Thursday evening.
"Of course, all players will think they should be in, and that's why they are top players.
"They have that self-belief and mindset, but the fact is we have some players who have been playing extremely well in the league all season.
"We just felt other players had stronger seasons, particularly in the last six months or so."
The England boss also revealed that Maguire would not have been fit to play in any group stage games in Germany.
"Trent can play in defence, and I think we have nine defenders," Southgate said.
"It was part of the reason why we couldn't take Maguire because that means we would have had to take a tenth and then the balance wouldn't have been right.
"Harry has made some progress but it's been complicated, we definitely wouldn't of had him for the group stages."
Posting on social media shortly after the news broke, Maguire revealed his "devastation" at not making the squad:
"I am devastated not to have been selected to play for England at the Euros this summer.
"Despite my best efforts, I have not been able to overcome an injury to my calf. Maybe I pushed myself too hard, to try and make it. Simply, I am absolutely gutted.
"For me, representing England is the highest honour. It means everything to me. If I can’t help the team as a player, I will support them as a fan – along with the rest of the country. Go and win it boys.
"Next, I will return to the supervision of the Manchester United medical team in order to prepare for next season."
The 31-year-old made his senior debut in 2017 against Lithuania and was pivotal for England as they reached the semi-finals of the 2018 World Cup in Russia.
His form at Manchester United has been indifferent since then however, with fans and pundits often critical of his displays amid many high-profile errors.
Despite inconsistent club form, Southgate selected him for the World Cup in Qatar, where England reached the quarter-finals.
Maguire boasts 63 caps for England, while Grealish has featured 36 times.
The news means places for Aston Villa's Ezri Konsa, Manchester United's Kobbie Mainoo as well as Crystal Palace's Eberechi Eze and Adam Wharton.
Southgate has now officially finalised his squad for the Euros, with their first game taking place against Serbia on June 16th.
The Three Lions face Iceland in their final warm-up game at Wembley on Friday evening.
England's Euro 2024 squad:
Goalkeepers: Dean Henderson (Crystal Palace), Jordan Pickford (Everton), Aaron Ramsdale (Arsenal)
Defenders: Lewis Dunk (Brighton), Joe Gomez (Liverpool), Marc Guehi (Crystal Palace), Ezri Konsa (Aston Villa), Luke Shaw (Manchester United), John Stones (Manchester City), Kieran Trippier (Newcastle), Kyle Walker (Manchester City)
Midfielders: Trent Alexander-Arnold (Liverpool), Conor Gallagher (Chelsea), Kobbie Mainoo (Manchester United), Declan Rice (Arsenal), Adam Wharton (Crystal Palace)
Forwards: Jude Bellingham (Real Madrid), Jarrod Bowen (West Ham), Eberechi Eze (Crystal Palace), Phil Foden (Manchester City), Anthony Gordon (Newcastle), Harry Kane (Bayern Munich), Cole Palmer (Chelsea), Bukayo Saka (Arsenal), Ivan Toney (Brentford), Ollie Watkins (Aston Villa)