The actress is to play the role of Sheila Canning, who arrives on Ramsay Street later this year to pay Kyle a surprise visit.
Billed as "much-loved and very opinionated", Sheila is a new regular character for the soap and sparks will fly as she is introduced to Kyle's girlfriend Jade (Gemma Pranita).
In a statement, Mann said that - as a mother of two grown-up sons - she is looking forward to working with younger co-star Christopher Milligan, who plays Kyle.
"Chris is a lovely boy, however like my sons, he'll wonder what has hit him after working with me for a few weeks," she joked.
Mann previously appeared on Neighbours in 1995, taking over the role of Cheryl Stark for eight weeks while lead actress Caroline Gillmer was unwell.
Her most famous role to date has been portraying Doreen Anderson on Prisoner, known as Prisoner: Cell Block H in the UK.
> Neighbours casting Kyle Canning's grandmother
> Neighbours unveils Kyle's new pet dog Bossy
> Read more Neighbours spoilers and news Get the Inside Soap magazine on your iPhone or iPad