Marcus Smith will step in at fly-half, while Ellis Genge will captain the side, but Borthwick said Farrell will take over the leadership once he comes on as a replacement.
Farrell's goal-kicking has been poor during this Six Nations campaign and that was one of several factors behind Borthwick's decision.
Ahead of Sunday's (AEDT) match at Twickenham, the decision to demote 104-cap Farrell was the standout selection issue on either side, particularly as it comes so soon in Borthwick's reign, and ahead of a Rugby World Cup later in the year. This will be just Borthwick's fourth game in charge.
Genge was captain under Borthwick during their time together at Leicester Tigers, and it remains to be seen whether the coach sees him occupying the role on a regular basis at international level. This will be his first time captaining England from the start in a Test.
Borthwick knew his selection would be a contentious move, and he said England was in "a fantastic position" to have such strong options at fly-half.
"My job is to select who the right person to start and who the right person to come off the bench is," Borthwick said.
Eddie Jones' successor stressed he made line-up decisions on a game-by-game basis and sidestepped a question about Farrell's long-term future as captain, saying he was focusing only on the France game.
Farrell has been captain since the 2019 Six Nations. Borthwick said the 31-year-old had been "brilliant" in training this week, while also hailing Genge's captaincy qualities. He described Genge as "a fantastic leader, a natural leader, and he's somebody players follow".
"To have Ellis and Owen there, it's two brilliant men that these players get behind," Borthwick added. "I can't praise Owen enough, not just for this week but every day since we've started working together in this capacity. He cares so deeply about this team."
Asked about Farrell's kicking problems in relation to the team selection, Borthwick said: "I consider every aspect as I try to do this job as thoroughly as possible.
"I think if you were to track all the teams I've selected over the last few years, there have been some pretty bold decisions. I think what I've tried to do is pick a team that is right team for that game.
"That's what I do every single week. Every game matters for England. I believe this is the right team in all the different considerations and all the different factors against a very, very good French team."
England: Freddie Steward, Max Malins, Henry Slade, Ollie Lawrence, Anthony Watson, Marcus Smith, Jack van Poortvliet; Ellis Genge (captain), Jamie George, Kyle Sinckler, Maro Itoje, Ollie Chessum, Lewis Ludlam, Jack Willis, Alex Dombrandt.
Replacements: Jack Walker, Mako Vunipola, Dan Cole, David Ribbans, Ben Curry, Alex Mitchell, Owen Farrell, Henry Arundell.
France: Thomas Ramos, Damian Penaud, Gael Fickou, Jonathan Danty, Ethan Dumortier, Romain Ntamack, Antoine Dupont (captain); Cyril Baille, Julien Marchand, Dorian Aldegheri, Thibaud Flament, Paul Willemse, Francois Cros, Charles Ollivon, Gregory Alldritt.
Replacements: Peato Mauvaka, Reda Wardi, Sipili Falatea, Romain Taofifenua, Sekou Macalou, Maxime Lucu, Yoram Moefana, Melvyn Jaminet.