The 33-year-old will have to register the team, named One Tokyo, in the fourth tier of the Tokyo Shakaijin Soccer League under competition rules.
Open trials for prospective players will be held on January 24, according to the fledgeling club's website.
"We want to see players who are fixated on winning come here," tweeted Honda on Tuesday. He is listed as the club's owner.
One of Japan's most recognisable athletes with his spiky, bleach-blond hair, Honda represented Japan at three World Cups and played for AC Milan and CSKA Moscow.
He parted ways with Dutch side Vitesse Arnhem last month after just six weeks.
In September Honda made headlines for a bizarre tweet in which he begged Manchester United to take him on, indicating he was willing to play for free.
His family-run management company bought a 49 percent stake in Austrian club SV Horn in 2015, before pulling the plug due to "financial difficulties" last season.
"It was a painful decision to pull out but I have learnt a great deal from that mistake," he said on One Tokyo's website.
"I want to build a football club from zero in Tokyo that can have a global impact. I want to build it together with everyone."
Honda, who also had spells with Dutch club VVV-Venlo, Mexico's Pachuca and Melbourne Victory after making his professional debut for J-League side Nagoya Grampus, played 98 times for his country, scoring 37 goals as an attacking midfielder.
Despite still playing and having no coaching experience, in 2018 he became the general manager of Cambodia's national team -- effectively a shadow head coach -- a role he holds even after suffering a 14-0 demolition by Iran early in his reign.