McGrath, who holds the record for most Test wickets by a fast bowler with 563 at an average of 21.64, will be inducted during the lunch interval on the opening day of Australia's Test with Sri Lanka at the SCG on Friday.
The 42-year-old, who retired in 2007, will become the 68th male member of the Hall of Fame and joins West Indian Brian Lara and Englishwoman Enid Bakewell as the 2012/13 inductees.
"I am honoured that the ICC Cricket Hall of Fame voting academy, which includes all the current living Hall of Famers, have nominated and voted me to be inducted into the Hall of Fame," McGrath said.
"I am very much looking forward to celebrating the occasion on 4 January with not only my friends and family, but all those at the SCG which is of course like a second home to me."
McGrath, a key member in Australia's domination of world cricket in the 1990s and 2000s, made 124 Test and 250 ODI appearances, claiming a combined total of 944 wickets in a career spanning 14 years.
He still holds the record for the most wickets in ICC World Cup competitions with 71.
His seven for 15 against Namibia at the 2003 World Cup remains the best bowling effort in the event's history.
A fourth and final inductee for 2012-13 will be announced next July.
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