According to Marquardt — who made the announcement while appearing on FOX’s Web talk show The Strategy Room — Madison is fulfilling a long-time dream to be on DWTS.
She had previously been unable to appear due to scheduling issues — and ex-boyfriend Hugh Hefner not wanting her to appear on the show, Marquardt added.
"I'm so excited for her," Marquardt said. "She's wanted to do it for so long, it just never worked with her schedule and Hef was always like 'I don't want you to do that,' and now it's her time, so I'm really happy for her."
PHOTOS: Click here to see photos of Holly Madison.
There has been speculation that Madison, 29, was going to replace Jewel after the singer said last week that tendonitis in her knee could have forced her to not compete.
Still, according to Us magazine, a source close to Jewel — who said via statement that fans should not count her out just yet— said Monday that the singer would compete.
But Marquardt told FOXNews.com that Madison would be seen in the upcoming episode of DWTS to air Monday, March 9, and was looking forward to her appearance on the show.
Madison recently made headlines for her split with magician Criss Angel, whom she began dating after ending her relationship with Playboy mogul Hefner.