The outfit, made famous in the 1978 film's final song,"You're the One That I Want," is estimated to fetch between $100,000 and $200,000, according to the auction house selling it along with hundreds of other items from Newton-John's career.
The actress, now 71, starred opposite John Travolta as Sandy Olsson. Ahead of the auction, Newton-John revealed that she had to be sewn into the high-waisted pants. "The pants have a broken zip and I had to be stitched into them because they were made in the '50s," she told Reuters Television.
After being diagnosed with breast cancer for the third time since 1992, Newton-John decided to sell more than 500 items from her career to raise funds for her cancer wellness center in Australia.
She told Reuters Television that it had taken months to sort through boxes and storage containers, but that it had been "a fun venture."
"I've realized over the years, especially when you go through stuff, that stuff isn't what's important," she added.
Other items on sale include the original "Grease" script and the pink dress she wore to its premiere in LA, which are valued at $4,000 and $3,000-5,000, respectively.
A custom Pink Ladies jacket given to her by the "Grease" cast and crew will also go under the hammer and is expected to fetch between $2,000 and $4,000.
The auction includes pieces outside of the "Grease" realm, for example, dresses Newton-John wore during the tour of her double platinum 1981 album "Physical," the title track of which spent 10 weeks at No. 1 in the US charts, the longest of any song in the 1980s.
Martin Nolan, executive director of Julien's Auctions, said in a statement the company was "honored" to host an auction to celebrate "one of pop music's greatest talents and treasured icons."
He added: "Her extraordinary career -- that includes her starring role in Grease, one of the most successful Hollywood films and soundtracks of all time -- and her recordings of some of the biggest pop singles of the 20th century, makes her more than just a star but a pop culture phenomenon."
The-CNN-Wire ™ & © 2019 Cable News Network, Inc., a Time Warner Company. All rights reserved.