Ryder Cup captain Donald will oversee the event in Abu Dhabi from January 13-15 along with two playing captains, with two 10-man teams competing in foursomes, fourballs and singles and all 20 players taking part in each session.
The competition effectively fills the gap left by the Seve Trophy, which was held eight times between 2000 and 2013 and gave captaincy experience to future Ryder Cup skippers Colin Montgomerie, Jose Maria Olazabal, Nick Faldo, Paul McGinley and Thomas Bjorn.
Donald said: "One of the first things I was keen to do when I was appointed as Ryder Cup captain was to reinstate a team match play contest to give playing and leadership experience to future Ryder Cup players, vice-captains and captains.
"I spoke to a number of former Ryder Cup captains who were strong advocates of how similar events in the past have benefitted players who were pushing to make Ryder Cup teams, as well as their own captaincy journey.
"I am therefore grateful to Hero MotoCorp and the DP World Tour for supporting the concept of the Hero Cup and I look forward to seeing the players compete at Abu Dhabi Golf Club in January."
The two teams will be confirmed following 2022 DP World Tour Championship in Dubai, with performance on the DP World Tour Rankings taken into account in the selection process.
Donald was one of Padraig Harrington's vice-captains for the 2021 Ryder Cup at Whistling Straits, where the United States enjoyed a record 19-9 victory.
Ryder Cup director Guy Kinnings said: "We have a pretty good model that works well on the Ryder Cup but clearly every cycle you need to improve; we certainly needed to improve on the last time and we've looked at every aspect and listened to everyone."
The chances of Rory McIlroy and Jon Rahm playing in the Hero Cup would appear slim given it takes place the week after the Sentry Tournament of Champions in Hawaii, one of the "elevated" events the PGA Tour's top players have committed to play in response to the threat of LIV Golf.
As things stand, LIV recruits remain eligible to play on the DP World Tour and earn Ryder Cup qualifying points from this week's BMW PGA Championship, while Kinnings would not be drawn on whether they would be chosen for the Hero Cup.
"The teams will be selected after the DP World Tour Championship and that's something that Luke will work on together with the captains to decide what the right make up of those teams is," Kinnings said.