Folk singer-songwriter Martyn died in 2009 at the age of 60. In a career spanning more than 40 years, Martyn recorded 20 studio albums, including Solid Air and Grace and Danger.
Beck, Bombay Bicycle Club, Phil Collins, David Gray and The Cure's Robert Smith have also signed up for the album, titled Johnny Boy Would Love This.
Collins, who worked with Martyn on two of his albums, described his friend as "unique", and said that he was "proud" to have collaborated with him.
"John Martyn was unique," he said. "Completely unique. He had such power, such emotion in his music that he could overwhelm the listener even when it was just him and an acoustic guitar. I loved him very much as there were no half measures, literally and musically. I hope people remember him and his music always."
Gray added: "John Martyn was a true pioneer within the world of acoustic music. As a writer he was a master of understatement, who always managed to conjure songs that were deeply poetic, whilst using only the simplest words and phrases. Entering into his music is like finding another place to be."
The tribute album will be released on August 15, and will feature 30 cover versions by artists including Morcheeba and Beth Orton.
Watch John Martyn perform 'May You Never' in 1978 below: