World champion Catharine Pendrel of Harvey Station, N.B., is the headliner on the team unveiled Wednesday.
Rising star Emily Batty of Brooklin, Ont., was named to the team ahead of Marie-Helene Premont, who won silver at the 2004 Summer Games.
"The only thing we kept wishing was that we had three spots because they're both incredible riders," national mountain bike coach Dan Proulx said from Mont-Sainte-Anne, Que., during a conference call. "Ultimately it comes down to the best potential for a medal performance.
"At the end of the day it was decided that Emily was the best choice for this Olympics."
Geoff Kabush of Courtney, B.C., competing in his third Olympic Games, and Victoria's Max Plaxton are on the men's team bound for London.
Each country is allowed a maximum of two female racers and two male racers.
The 24-year-old Batty was eighth in last year's world championship and is currently ranked 15th in the world. She earned her first World Cup podium earlier this year by finishing second in a South Africa race.
Premont, 34, finished just behind Batty in ninth at the world championship and is currently ranked 20th.
"To gain this spot over Marie-Helene, it's very honouring, but at the same time it's very difficult," Batty said. "While I did take the second spot over Marie, Marie is somebody that paved my path. Any given day, she's still podium potential."
Pendrel is the world No. 1 in women's mountain biking. The 31-year-old finished fourth in her first Olympics in Beijing four years ago and will be a podium contender in London.
"Whenever you have expectations on you, I think it can be a huge positive because it means there's that many people who believe in you and your ability," Pendrel said.
"I think you need to harness those expectations and turn it into confidence. That's what I plan to do going into London."
Pendrel and Batty will give Canada a strong 1-2 punch on the Hadleigh Farm course Aug. 11.
"Canada is ranked No. 1 in the world in women's mountain biking," Pendrel points out. "It's so unfortunate we only get to take two women to the Olympics because we have three women who can go there and perform.
"I think both Emily and myself have shown this year we can be on the World Cup international podium. There's a lot of very talented women out there. I feel there's six or more women capable of the win on the day. We all have to bring our 'A' game."
The Canadian cycling team's objective is to win at least two medals and that's from all disciplines including track, road and BMX. It's quite likely a medal will come from the mountain bike team, however.
"If we come out than less than two medals, we'll have missed the benchmark," said Jacques Landry, Cycling Canada's high-performance director.
The women race on the penultimate day of the Games, while the men don't compete until the day of the closing ceremonies Aug. 12.
The mountain bike team competes at a World Cup in France just prior to the Games. The riders will then stay at a house near Hadleigh Farm to prepare for their Olympic races.
"It's too bad we're not going to get to enjoy the experience in the village much," Kabush said. "We'll be a bit removed which I think is going to be best for our focus for the competition.
"The men are racing just before the closing ceremonies, but I'm excited to get cleaned up and go to the closing ceremonies. Definitely some of my best memories from the Games are hanging out with all the athletes in the infield."
Kabush finished ninth at the 2000 Summer Games in Sydney, Australia, and was 20th in Beijing. He's 28th in the men's rankings. Plaxton, who will make his Olympic debut, is currently 40th.
"I've crossed the first phase off the list of making the team and now I'm going focus on having the best race I can," Plaxton said.
Canada has won two Olympic medals in mountain biking. Alison Sydor took silver in 1996 followed by Premont's silver in 2004.
The Olympic track cycling team was announced last week. It includes Edmonton's Tara Whitten, Zach Bell of Watson Lake, Yukon, Calgary's Monique Sullivan, Joseph Veloce of Fonthill, Ont., Jasmin Glaesser of Coquitlam, B.C., and Gillian Carleton of Victoria. Laura Brown of Vancouver is an alternate.
The road cycling team will be announced Thursday.