The 9 To 5 star announced the news on Twitter, where she has almost three million followers, saying: "I'm incredibly excited to FINALLY announce that the BlueSmokeWorldTour is coming to GlastoFest on June 29th! Stay tuned for more info."
It is not known if she will headline the Sunday night slot - the festival's finale - or whether she will play the main stage or one of the smaller stages.
Emily Eavis, whose father Michael founded the festival in 1970, said: "We are delighted to say that Dolly is coming to Glastonbury... It really doesn't get much better than this!"
The line-up for last year's festival included the Rolling Stones, Arctic Monkeys and Strictly Come Dancing host Sir Bruce Forsyth.
Parton's career has seen her rack up dozens of hits including Jolene and I Will Always Love You, which was also a huge hit for Whitney Houston, and star in films including Steel Magnolias.
She also set up Dollywood, a theme park in her native Tennessee, and runs a literacy campaign which gives free books to millions of children every year.