Stam left Old Trafford in 2001 to join up with Lazio after spending three years with the Reds; two other treble winners who will be joining him in the United squad are Teddy Sheringham at Nicky Butt.
The team will be captained by Bryan Robson and will also feature Stam's fellow countryman Edwin van der Sar.
Speaking to United's official website, he said: "I was lucky to enjoy an incredible career and finish on a high with Manchester United.
"Of course, I have missed playing football and I'm really looking forward to returning to Old Trafford.
"Nothing can replicate the feeling of competing in front of a home crowd against a quality opposition like Real Madrid and to do it for charity makes it more special. In my time at United, I visited some of the foundation's projects and I know the money raised from this game will really help to make a difference."
Source: United Mad