A special stage will be constructed underneath the big screen in the city's Armada Way's Piazza, from which the 15-year-old will talk the crowd in his home city through the highlights of his triumph in Rome last week.
Daley was also given a parade after he returned from Beijing last year where he became the youngest competitor to represent Britain in the Olympics for 48 years.
Daley said: "After the Olympics it was crazy doing the parade – it was great to see all the people of Plymouth coming out to show their support.
"I don't know how many people will come to this one but it's been great to get all the support from people back home."
Plymouth Council has already plastered the city in about 300 posters honouring his achievement.
The parade is due to start at 11.30am when Daley is due to meet Lord Mayor of Plymouth Ken Foster for a civic reception.
The Plymouth College student has been invited to a buffet lunch at the Council House and plans are afoot to present him with a commemorative plaque on behalf of the city.
The whole Daley family will then board a specially-decorated open top bus which will take them down what is expected to be a jam-packed Royal Parade from 12.25pm.
Vivien Pengelly, the Leader of Plymouth Council, said: "To become world champion at the age of 15 is an incredible achievement and we wanted to do something as a city to recognise that.
"I am sure many Plymothians will turn out on Friday to congratulate him and welcome him home.
"We'd love people to come into town with red, white and blue balloons and Union flags.
"He is a wonderful ambassador, not only for his sport and young people but also for the city.
"Plymouth is immensely proud of Tom."
David Draffan, the managing director of the Plymouth City Centre Company, which is helping to organise the homecoming, said: "We hope everyone will turn out to celebrate this remarkable achievement.
"It will be a great opportunity to see Tom with his medal."