Paul is scheduled to have arthroscopic surgery on his left knee on Thursday to repair a meniscus tear and will miss the All-Star game. NBA commissioner David Stern chose Billups as Paul's replacement.
Billups is averaging 19.4 points and 6.2 assists and has guided the Nuggets to the Western Conference's second-best record. He averaged 24.2 points in January, including a career-high-tying 37 against Golden State on Jan. 20.
Billups received the news while he was resting up Wednesday afternoon for the Nuggets' game against the Phoenix Suns.
"I'm definitely excited," Billups said. "It's always great to be at the best weekend with the world's best basketball players."
The West coaches didn't vote Billups among the All-Star reserves, despite the Nuggets' success this season. But Billups knew there was a chance he might be selected as a replacement.
"Do I feel like I should've got in by the coach's vote? Of course I do," Billups said. "But I don't know that I deserve it over anyone. It doesn't take the luster off of it. At the end of the day, I'm an All-Star. I'm there."
Billups said he had been talking with Paul since Yahoo! Sports reported Sunday night that the Hornets point guard needed surgery and likely wouldn't be able to play in the All-Star game.
I told him, 'You're young. You will still have 15 more years in the league,' " Billups said.
After he wasn't selected as a reserve, Billups made plans to spend the break in Mexico with his wife, Piper.
"I'm just trying to get my refund. I hope I can," Billups said. "That was for a big day, Valentine's Day in Cabo. She is excited about me getting rewarded, but she'd surely like to have me to herself for a weekend than with everyone in Dallas."