The winners of the last five Spanish Vueltas are also back, as is the ever-dangerous Alex Zuelle of Switzerland.
``Because of the competitors and the expectation, this promises to be the Vuelta of all Vueltas,'' race director Enrique Franco said.
Most of the attention will be focused on Indurain, who has never won the race and has shunned it since 1991, when he finished second before going on to win the first of his five consecutive Tours de France.
After failing in his bid for a sixth Tour victory, Indurain bounced back to take the Olympic time-trial in Atlanta.
But Spain's number one sporting idol is unhappy about being asked to take part by the Banesto team, and the decision has prompted speculation over his possible retirement.
``I don't know how to approach the Vuelta, because I've never ridden a big race at this time of year,'' Indurain said. ``I fear these 23 days could become an eternity. But it was the team's decision and one has to accept it.''
Nor is it clear that the enormous interest generated by his entry will help Indurain, who is thought to have favoured Italy's Giro over the Vuelta in the past because it allowed him to escape the adulation of his home fans.
The race will be one of the last chances to see Indurain fight it out with Swiss rider Tony Rominger.
Rominger, winner three times between 1992-94, insists he is simply using the Vuelta as preparation for the world championship in Switzerland in October, but he will be driven by personal rivalry with Indurain.
``If people see ``first Rominger, second Indurain' things change -- the victory would be worth more,'' said Rominger, who at 35 is also in the final straight of his career.
The hot favourite for the team prize is local stable ONCE, which boasts last year's winner Laurent Jalabert of France, Zuelle and 1991 winner Melchor Mauri, backed by the tactical expertise of manager Manolo Saiz.
But Saiz is unsure how the big names will cope with an apparently innocuous opening section of largely flat stages.
``The first week worries me. If we and Banesto hide away perhaps there'll be an unpleasant surprise,'' Saiz said, looking ahead to the start in Valencia on Saturday.
Saiz may well be thinking of up-and-coming-riders such as Fernando Escartin of the Kelme team who seems a natural successor to Indurain and will be eager to make his mark.
The tough mountain stages come towards the end of the 23-day race, with the second time-trial -- an Indurain speciality -- on the day, before the climax in Madrid's central avenue, the Castellana.
``What the Castellana would be like if Miguel arrives in (the leader's) yellow jersey,'' mused race director Franco. ``Unimaginable.''
"I will not allow myself to take part in a race against my better judgement and I will only continue if I think I have a chance of winning the Tour de France again," the 32-year-old said.
Indurain, who failed to win a record sixth consecutive Tour in July, revealed he only went to Atlanta after a personal request from King Juan Carlos of Spain.
"I didn't really want to go," he said.
International Olympic Committee president Juan-Antonio Samaranch asked King Juan Carlos to try to get Spain's greatest cyclist to the Olympics, where he duly won the road time-trial.
"I'm a professional so I'll do my best here but I can't say how things will go. I've never ridden in a major race so late in the season," he said.
The Tour of Spain, or Vuelta, was changed from a spring to an autumn date specifically to lure the top riders. The 3,898km, 22-stage race finishes in Madrid on Sept 29.
Tour de France winner Bjarne Riis of Denmark is missing and Indurain's greatest challenge will come from last year's winner Laurent Jalabert of France and Once team-mate Melchor Mauri of Spain, who won in 1991.
Jalabert is especially keen to make up for his crashing failure in the Tour de France in July after he had started as one of Indurain's biggest rivals.
Tony Rominger, who chalked up a hat-trick in the Vuelta in 1992-94, made a late entry to get in shape for the world road championship in his native Switzerland in October.
"I'm feeling pretty good," said the 35-year-old, who may lose his hour record to Britain's Chris Boardman later on Friday.