Mahmood, who died on May 30 last year at the age of 78, was regarded as Pakistan's first great paceman and the Surrey ground was the scene of one of his finest performances, when a 12-wicket haul guided the team to a stunning series-levelling win in 1954.
He also played a big role in many famous Pakistani victories during the same decade.
''The room has been obtained from the Surrey Cricket Club and has been named as the Pakistan room. It will be inaugurated during the final test against England in August,'' PCB Director Abbas Zaidi told Reuters today.
The PCB and Pakistani community in London would be able to use the room during matches at subsidised rates.
Zaidi said the board had also prepared a special portrait of Mahmood which would adorn the room.
''We are also planning to have portraits and other memorabilia of Pakistan cricket in the room,'' he said.
''It is a small effort on our part to pay tribute to Mahmood, who is a Pakistan cricket icon.'' Pakistan begin their four-match series against England at Lord's on July 13.