The 29-year-old's programme will include a grand prix meeting on February 18 in Birmingham, the English city where the Jamaican team will be based in the lead-up to the Olympics in July and August.
Powell last raced on the indoor circuit in 2004 and said in a statement on Tuesday: "My coach and I have been speaking about the ideal preparation for next year's Olympics and we think doing an indoor season is the best move for me.
"I love competing indoors and to get the opportunity to race in Birmingham is really exciting.
"The calibre of athletes there has always been strong and if I'm going to be challenging for medals, I need to be racing against the best opposition all the way up until the Olympics. It's not long now until the Games so every minute counts."
Powell, who has clocked more sub-10-second performances over 100m than any other athlete, is targetting the world indoor championships in Istanbul in March.
He raced a 9.91-second 100m in Birmingham last July before pulling out of the Daegu world championships because of injury.
He held the world record from 2005-08 and faces stiff opposition from countrymen Usain Bolt and Yohan Blake as well as Tyson Gay of the United States when he bids for his first individual Olympic gold next year.
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