The 35-year-old double Olympic cycling champion will take part in the Foxhunters Chase on Pacha Du Polder on Friday, 18 March.
She guided the nine-year-old to victory at Wincanton last week - her first success as an amateur jockey.
"Being part of the Cheltenham is like being at the Olympics," she said.
"By no means was this an easy decision to make and I have spent a lot of time thinking how I would handle this wonderful opportunity.
"There are lots of risks, but I feel I am capable of being part of the race."
Seven-times champion jumps jockey John Francome has been an outspoken critic of Pendleton, claiming she "can't ride", is "an accident waiting to happen" and wants "saving from herself".
Pendleton, who won Olympic gold in the sprint at the 2008 Beijing Olympics in Beijing and the keirin at the 2012 London Games, added she was "very blessed" to have been given the opportunity.
"If I get around and complete the course, it will be like winning a gold medal," she said. "It seemed so unrealistic at the beginning.
"I wouldn't have made the decision without the support of the team around me and I would like to thank them and the jockeys who have publicly supported me."
Pendleton described the training as "very difficult but very enjoyable" and said the decision to take on the three mile and two-and-a-half furlongs at Prestbury Park was not taken lightly.
Paul Nicholls, who trains Pacha Du Polder, believes Pendleton can put in a strong display but accepts victory might be beyond her.
"At the beginning, I was dubious," he said. "But from the start, Victoria's enthusiasm and courage has been to the fore and her improvement month-to-month has been incredible.
"She is well ready for the challenge. Pacha Du Polder is the ideal horse. He is a super horse and a safe jumper.
"We will discuss tactics next week. We need to ride him more patiently and take our time, but fifth or sixth would be a fantastic achievement."
Victoria Pendleton has been given the go-ahead to ride at next week's Cheltenham Festival, just over a year after taking up the sport.