Webb, a Republican-turned-Democrat, said he would file on Thursday, his 60th birthday, then kick off his campaigning next week.
He faces Harris Miller, a leader in Virginia's technology community, in his bid for the nomination.
Webb served as assistant secretary of defense from 1984-87 and Navy secretary until 1988. He said national defense and security would play prominently in his campaign.
"Look at my experience. I've been in the military all my life. I worked overseas as a consultant on base planning. I actually fought in a war," Webb said in a telephone interview Wednesday.
"I've got a lot of different kinds of experience that I think is important in light of our very unfortunate strategy in Iraq," he said.
Webb said his campaign will also focus on ways to help middle- and low-income families and "restoring the traditional role of Congress" by checking the growth of presidential authority since the terrorist attacks of September 11, 2001.
His decision to run won't affect Miller's Senate campaign, said Miller spokesman Brian Cook. "We're still going to keep traveling around Virginia making the case that Washington is broken," Cook said.
Dick Waddams, a political adviser to Allen, said he looks forward to "a spirited Democratic primary."
"We'll run a campaign based on our vision for a competitive and secure America," Waddams said.
This is not Webb's first involvement in a Virginia U.S. Senate race. In 1994, he spoke against his former Naval Academy classmate, Iran-Contra figure Oliver L. North, when North challenged Sen. Chuck Robb, a Democrat. Webb spoke out after North belittled Robb's service as a Marine in Vietnam.
Six years later, Webb endorsed Allen when the former governor successfully challenged Robb. Along with Warner, Allen is considered a likely contender for president in 2008.