Mills will be the first contestant with an artificial limb to compete on the series, which returns for its fourth season March 19. She lost the leg in a motorcycle accident in 1993.
Olympian Apolo Anton Ohno, boxer Laila Ali, former basketball star Clyde Drexler and actor Vincent Pastore, who played gangster Salvatore "Big Pussy" Bonpensiero on "The Sopranos," are also in the cast.
Jerry Springer, one of last season's competitors, teased ABC's "Good Morning America" audience before tossing out Mills' name.
"She may be a sentimental favorite," said Springer, even though Mills has Yoko Ono-like favorability ratings among many Beatles fans. Her selection delivers a message that whatever challenges people face in life, they can dance, he said.
Mills is an activist for animal rights and elimination of the use of land mines.
"Dancing With the Stars" has proved to be a substantial hit for ABC, although this is the first time it will air when a season of Fox's "American Idol" is under way. ABC will air its dancing competition on Monday and Tuesday nights to avoid going head-to-head with "American Idol."
Actor and former country star Billy Ray Cyrus, former 'N Sync member Joey Fatone, Miss USA 2004 Shandi Finnessey, former "Entertainment Tonight" host Leeza Gibbons, model Paulina Porizkova and former "Beverly Hills, 90210" star Ian Ziering round out the cast.