Miss Clark said the fellowship would enable people from India or Nepal, who had the potential to become leaders or have influence in parliamentary, academic, business, cultural or other fields, to visit New Zealand.
"We believe Sir Edmund would be honoured that this new fellowship will allow people from India and Nepal to get to know New Zealand better," she said in a statement.
"One visit under the fellowship will take place to New Zealand each year and the Ministry of Foreign Affairs and Trade will oversee the selection of the fellows."
Miss Clark said Sir Edmund was an important figure in the history of New Zealand's relationship with India and Nepal.
"He served as New Zealand's High Commissioner to India in the 1980s. Earlier this year, India posthumously awarded Sir Edmund Hillary the Padma Vibhushan award, one of its highest civilian honours."
Miss Clark's announcement of the fellowship coincided with the first state visit to India by Governor-General Anand Satyanand.
She said Mr Satyanand would convey the news of the fellowship when he met the president and prime minister of India in New Delhi today.
"Lady Hillary has been consulted about the fellowship and agreed to the naming of it in Sir Edmund's name," Miss Clark said.
The legendary mountaineer died in Auckland hospital on January 11 this year. He was 88.
