The Michael Palin Scholarships will be available for boys and girls entering Shrewsbury School at the age of 13 from September 2017 onwards.
The actor today said he was delighted to help, saying he hoped other children would benefit from the same profound effect that the school had on his life.
He said: "As I have gone through life I realise that I learnt a lot of valuable lessons in my four years as a pupil at Shrewsbury. I learnt to follow my curiosity and argue my own case. I learnt to deal with doubts and fears by simply being pushed to do something I'd never tried before.
"When I was asked if I would give my name to the All-Rounder Scholarships I felt honoured.
"But my immediate reaction was that there must be so many Salopians who have achieved more in life and would set a better example than myself.
"And then there came back to me from all those years ago an echo of that still small voice telling me not to step backwards but to step forwards.
"I very much hope that those who benefit from the Michael Palin Scholarships will appreciate that they are named after someone who came to Shrewsbury mistaking shyness for inability and indecision for lack of talent, and who left having discovered that everything that seemed impossible was possible."
Each year Shrewsbury School gives more than 60 scholarships to boys and girls.
They help youngsters who have particular academic, sporting, artistic, musical, technical or dramatic ability and potential.
Palin, 73, is helping to launch a new scholarship rewarding all-round talent.
The veteran comedian, actor and presenter has always spoken fondly of his time at Shrewsbury.
Last year he revealed that his former teacher Laurence Le Quesne was the inspiration for the famous Monty Python 'The Knights Who Say Ni' sketch.
Shrewsbury School today described him as a "wonderful role model".
Headteacher Mark Turner said: "We are delighted and honoured that he has given his consent and approval for scholarships to be awarded in his name.
"Quite apart from the success Michael has achieved, at Shrewsbury School we are particularly proud that he is perhaps most famous for his warmth of character and the personal qualities that shine through so much of his television and writing work.
"He has a genuine interest in other people and an easy way of making conversation with them, with a complete lack of arrogance.
"He has a naturally curious mind, open to new experiences, not afraid of failure but eager to take on new challenges, someone who follows his passions and has remained true to himself – and, of course, known for his wonderful sense of humour and his readiness to laugh at himself.
"We are trying to attract boys and girls who are bright, have a sense of fun and adventure, and who will bring a range of talents and enthusiasms to the school.
"We are particularly keen that young people currently from state schools will feel encouraged to apply for the Michael Palin Scholarships – and indeed any of our other scholarships – as well as those from independent prep schools.
"The Michael Palin Scholarships will be worth up to 20 per cent of the fees, and as they will be subject to means-testing, additional bursarial funding can also be provided."
For further information about scholarships to Shrewsbury School, go to shrewsbury.org.uk/page/scholarships-and-bursaries