The parade will take place on August 11.
He's been a fixture at past Bud Billiken parades, but this will be his first as president.
"He's coming back home, so he'll be very much energized by his presence and the presence of all the constituents in the area," said Eugene F. Scott, Bud Billiken Parade chairman.
Parade organizers say talks with the White House began last October. Though security will no doubt be tight, the president is not expected to walk any part of the parade, and the main route down King Drive is not expected to change.
Before the parade, which typically draws more than a million spectators to the South Side, the president will attend a smaller VIP breakfast in Mandrake Park.
"One of the National Guard units will be firing the 21 gun salute," said Scott. "We'll play Hail to the Chief. We will do it right."
But can the parade still have the neighborly atmosphere with all the security?
"Oh, oh yes," said Willie Wright, Bud Billiken Parade coordinator. "You know, the kids and the adults they kind of line the curb, they're doing their barbecue. The president is just added value to that day."
Organizers say this is the fourth time President Obama will serve as Bud Billiken grand marshal. Most recently in 2007, then-presidential candidate Obama rode with wife Michelle in a convertible.
The president's appearance at the oldest and largest African-American parade will come during the thick of his re-election campaign.
"The African-American community is probably his strongest base, so he wants to shore that up and generate a lot of enthusiasm, and what better place to do that than at a parade," said Laura Washington, ABC 7 political analyst.
"For me and kids in my school, we like fun things, so him being in a parade would be very educational and fun," said Justice Mosley, 9.
ABC7's calls to the White House to confirm the president's Bud Billiken appearance were not returned.
Parade organizers have raised more than a million dollars in recent years for student scholarships. With the president raising the profile of this year's event, they expect to surpass their fundraising goals.