The ceremony will take place Dec. 11 before a game versus the New York Rangers. Sather, who coached the Oilers to four Stanley Cup championships, is currently the Rangers president.
Sather will become the ninth Oiler to be honoured with a banner, joining Al Hamilton, Wayne Gretzky, Jari Kurri, Grant Fuhr, Paul Coffey, Mark Messier, Glenn Anderson and long-time radio broadcaster Rod Phillips.
Sather was inducted into the Hockey Hall of Fame in 1997. He won four Stanley Cups as the Oilers head coach (1984-88) and a fifth in 1990 as the team's president and general manager.
Sather played 10 NHL seasons with the Boston Bruins, Pittsburgh Penguins, New York Rangers, St. Louis Blues, Montreal Canadiens and Minnesota North Stars, accumulating 192 points (80 goals, 112 assists). He also appeared in 72 playoff games.
Sather played one season with the Oilers in 1976-77 when the team was part of the World Hockey Association.