The iconic singer and model will top the bill on Sunday, June 17 for the Out and Our Fierce day of the weekend-long event, which takes place in Victoria Park, London.
Jones will head a lineup that already features performances from Lana Del Rey, Azari & III, Niki & The Dove, Chic feat. Nile Rodgers, Holly Johnson and Patrick Wolf.
It will be the second time the star has performed at the festival after headlining the Sunday night of the event back in 2010.
Mika has also been added to the Sunday lineup and will play the 'This Is Circus' stage hosted by Jodie Harsh.
Speaking about playing the event, he said: "I've spent many amazing, lost nights at Circus and I couldn't think of a better way of taking part in Jodie's night than doing this performance."
Lovebox 2012 will take place between June 15-17, with Hot Chip headlining the Friday bill and Friendly Fires taking the helm on Saturday.
Crystal Castles, Emeli Sandé, Kelis, Azealia Banks and Madeon will all perform sets across the weekend.
Tickets for Lovebox 2012 are on sale now.
Watch the music video for Grace Jones's 'Corporate Cannibal' below: