The 23-time Grand Slam singles champion will reportedly play alongside teenage Canadian Victoria Mboko.
Rumours have swirled in recent months that the former world number one was on the verge of a return and Monday's confirmation sent the tennis world into a frenzy.
Williams shared a video on social media of herself on a tennis court containing the caption: "Guess everybody heard the news", with her phone buzzing repeatedly in the background.
A post from the seven-time Wimbledon champion alongside the video said: "Good news travels fast."
Tournament chiefs said her return would be "one of the biggest sporting moments of the year so far".
"Queen's Club feels like the perfect place to begin this next chapter," Williams said in a statement from organisers.
"Grass has given me some of the most meaningful moments of my career, and I'm excited to be back competing on one of the sport's most iconic stages."
Queen's WTA tournament director Laura Robson described Williams as "one of the greatest athletes the world has ever seen".
Rumours
Williams' third-round loss at Flushing Meadows in 2022 left her one short of the all-time record of 24 Grand Slam singles titles, jointly held by Margaret Court and Novak Djokovic.
Her imminent return has been touted since it was revealed in December she had re-entered the anti-doping programme -- a prerequisite to play on the tour again.
The American, renowned for her unparalleled power, denied she was planning a competitive comeback but speculation grew.
In March, Djokovic predicted a return for Williams and a number of players have spoken about the subject at the ongoing French Open.
Coco Gauff, who lost in the third round at Roland Garros on Saturday, said she would love to face Williams for the first time.
World number one Aryna Sabalenka said it was "very good news for tennis".
"It's inspiring to see," the Belarusian said in Paris. "I'm actually excited to see her play and probably face her, so it's very cool."
Former world number one Martina Navratilova, who launched a comeback at 43, hailed her fellow American.
"Serena brought the game to another level and it is incredible for the sport that she's pushing the boundaries and coming back," she said.
"To many of the younger players, they never had the opportunity to play her. Some may have never watched her on television so this will be a new and exciting experience."
Williams, who won her last singles Grand Slam in Australia in 2017, spent 319 weeks at the top of the world rankings and won 73 singles titles on the WTA Tour.
She also won 14 major Grand Slam doubles titles with older sister Venus Williams, who ended a 16-month hiatus from professional tennis last year.
When Serena Williams stepped away from the court in 2022 she did not want to use the word "retiring" but instead explained she was "evolving" away from tennis.
She has earned nearly $95 million in prize money and is believed to be the highest-paid woman athlete of all time.
The American has largely stayed away from tennis over the past few years, giving birth to a second daughter in 2023.
She has focused on entrepreneurial projects through her venture capital fund Serena Ventures and has stakes in a number of sports teams.
Wimbledon starts at the end of June and it is not clear whether Williams, if she plays, would feature as a singles or doubles player.
Three-time Wimbledon champion John McEnroe said he was "semi-shocked" by her decision but added the "logical next step" would be for her to enter the singles draw at the grass-court Grand Slam.
"She's not coming back as 'I'm happy to play and it's fun' -- she wants to go win another major," he said on TNT Sports.
