Tendulkar is a popular figure in Australia and Gillard, who is currently on a tour of India, has revealed her admiration for the 39-year-old.
During a speech in Delhi, Gillard said: "Cricket is of course a great bond between Australia and India. We are both cricket-mad nations.
"I am very pleased that we are going to confer on Sachin Tendulkar the membership of the Order of Australia."
Tendulkar is the only cricketer to have scored 100 centuries on the international stage.