According to People, the teen icon is to play a schizophrenic patient at Seattle Grace Hospital.
"I'm so thrilled to announce that this week I'm shooting Grey's Anatomy!!!!!!!! AHHH!!!! (sic)," she tweeted on Monday.
Show creator Shonda Rhimes also echoed the Sonny with a Chance star's sentiments.
"Demi Lovato's on the Grey's set filming her guest spot. Everyone's super excited around here," she wrote on her own Twitter page.
The episode will feature Karev (Justin Chambers) and Arizona (Jessica Capshaw) treating her in the fictional hospital's paediatric ward.