Supporting Her Majesty's Most Loyal Opposition, Varoufakis will be advising Labour in "some capacity" due to his experience in dealing with the European Union, according to Jeremy Corbyn.
"Varoufakis is interesting, because he has obviously been through all the negotiations [with ECB, European Commission and the International Monetary Fund]," Corbyn told his local paper, the Islington Tribune.
"I think the way Greece has been treated is terrible and we should reach out to them," he added.
Varoufakis has already set up his own political movement, known as the Democracy in Europe Movement 2025, which is aimed at reforming EU institutions.
And the economist has previously hit out at the democratic credentials of the EU, saying: "While I was representing Greece - the newly elected Greek government - in the Eurogroup as its finance minister, I was told in no uncertain terms that our nation's democratic process - our elections - could not be allowed to interfere with economic policies that were being implemented in Greece."
The move comes after Corbyn met with Greek Prime Minister Alexis Tsipras to discuss EU reform and the European anti-austerity movement.
Though Corbyn is said to have previously harboured eurosceptic views, he will be campaigning to keep the UK in the EU.