The event at Melbourne, where Davenport's career singles record is 56-13, runs from Jan. 19 through Feb. 1.
The 6-foot-2 inch native of Palos Verdes, Calif., is the all-time women's earnings leader with more than $22 million, and her decision ended speculation that she would retire.
She has not played since she since her third-place finish last August at the U.S. Open.
Davenport won the Australian Open in 2000, one of her three Grand Slam titles among 55 career victories.
"We are really excited that she has entered," said tournament director Craig Tiley. "She is a world class player and a great ambassador for our sport."
The former world number one on the women's tour has won four titles since returning in September 2007.
She took time off to start a family and gave birth in June 2007 to son, Jagger.