Hershey will play the mother of the Evil Queen (Lana Parrilla) in the ABC fairytale drama, TV Line reports.
Her character Cora is due to appear later this season but she could also have a storyline in the second run if the show is renewed.
Hershey starred in Chicago Hope and has had roles in a number of movies, including Black Swan and Beaches. She also picked up an Oscar nomination for her role in The Portrait of a Lady.
Richard Schiff, Emma Caulfield and Alan Dale are among the stars who have already had guest roles in Once Upon A Time, while Emilie De Ravin is due to appear in the next instalment.
The show airs on Sundays at 8/7c on ABC in the US and will premiere in the UK on Channel 5 in the spring.
> Once Upon A Time: 'The Fruit of the Poisonous Tree' recap
> Read more coverage of Once Upon A Time
Watch a promo for the next episode of Once Upon A Time below: