Shepherd will play the president of the college where Bette Porter (played by Jennifer Beals) attends graduate school. Shepherd's character is a married mother who suddenly begins to question her sexuality.
"The L Word" is Shepherd's first series since "Cybill," the sitcom that ran from 1995-98.
Also, the 56-year-old actress starred in two different movies -- for different networks -- as Martha Stewart, before and after the domestic diva ran into legal difficulties in a stock-trading scandal.
Shepherd is a longtime gay-rights activist who has marched in rallies and parades since at least the early 1990s.
"The L Word" is set to begin its fourth season in 2007.