Ferguson steered United to 13 Premier League titles and also secured the Champions League trophy on two occasions as he became the most successful manager in Britain.
The Scot finally ended his 26-year reign in May and Trafford Council have confirmed he will be formally honoured at a meeting of councillors on October 14.
The local authority also decided to rename a road near Old Trafford stadium from Waters Reach to Sir Alex Ferguson Way.
"I am delighted to accept this honour from Trafford Council," said Ferguson.
"When I arrived at Old Trafford in 1986 I had little idea of the journey that awaited me. Over quarter of a century later, to receive the Freedom of the Borough of Trafford and to have a part of Trafford carrying my name is truly humbling."
Council leader Matt Colledge said: "Sir Alex has contributed significantly to Trafford over a sustained period of time through his strong leadership of the Manchester United team and it was felt that the Honorary Freeman title and the renaming of the street was a fitting tribute to him.
"Football contributes significantly to the borough through the large number of visitors it attracts and jobs it creates. It has been through the success of the team that the club has grown in strength over the years, becoming one of the world's most successful and renowned clubs."