The announcement was made in a ceremony at the Sydney Opera House on March 5.
Australia was given a wildcard entry to the 60th edition of the competition, to be held in Vienna, Austria.
It has been fast-tracked to the final and so will not have to compete in the earlier rounds.
Guy Sebastian won the first ever Australian Idol competition in 2003 and has since had eight Top 10 albums and two No 1 singles.
He was a judge on Australia’s version of The X Factor between 2010 and 2012.
Guy Sebastian said he was “pumped” to be performing at the competition.
“It’s Eurovision, it’s huge and keeps growing here in Australia which is nice,” he told ABC news.
Guy Sebastian has yet to choose a song to perform.
“That is still being worked out,” he said.
“I know that I can’t sing something that has been released prior to September, so it doesn’t leave me with a lot.
“Luckily enough I released my album in November… which narrows it down a little bit or I could write something in the next few days.
“I want it to represent us as a nation well but also just be fun or be emotional. Either super fun or like a big ballad or something that showcases my voice.”
The annual song contest is hugely popular in Australia – three million watched the competition in 2014.
The European Broadcasting Union said Australia had been given a pass to the final “to not reduce the chances” of the semi-final participants.
Australia will be allowed to vote in both semi-finals, as well as the grand final.
The possibility of allowing the public to have a 50% stake in the Australian vote through televoting is also being explored.
Australians have participated in the Eurovision contest before, representing other countries. Olivia Newton John sang for the UK in 1974 – coming fourth – as did Gina G in 1996. Jane Comerford represented Germany in 2006.
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