The announcement was made during the Demons' family day at Luna Park in Melbourne on Sunday.
A statement released by the club said the honour was in recognition of Barassi's ongoing contribution and standing in the game.
"Ron Barassi has been at the heart of Melbourne since his senior debut in 1953, when he played the first of 204 games in the red and blue between 1953 and 1964," the club said.
"Determined and inspired in his leadership, forever giving a richness and high standing to the No. 31 guernsey, Barassi went on to display the same skills in the coaching arena, and is one of the central figures of the game."
Barassi played in six premiership teams under legendary Melbourne coach Norm Smith. But he left the club in controversial circumstances in 1965, becoming captain-coach of Carlton.
He went on to win two flags with the Blues as playing coach in 1968 and 1970, before coaching North Melbourne to its first ever premiership in 1975. The Kangaroos repeated the feat again in 1977 when Barassi coached in two grand finals against Collingwood after the first match ended in a draw.
Barassi returned to coach Melbourne in 1981 and took on the top job with the Sydney Swans from 1993 to 1995.
In 1996, the man many consider to be the most determined man to have played the game was inducted into the AFL Hall of Fame. He was elevated to the status of Legend in the same year.
