Packer, Australia's richest man whose Publishing&Broadcasting (PBL) holdings include the Nine television network and 60 magazines, said the Kerry Packer Foundation would help retired Australian international players who had fallen on hard times.
It would also help young cricketers in Australia who needed financial assistance, he said on Tuesday.
Packer, 39, inherited majority position in the media empire after his father, Kerry, died of kidney failure aged 68 on Boxing Day last year.
Packer told a lunch on the opening day of the fourth Ashes cricket Test at the Melbourne Cricket Ground that the guidelines of the foundation would not be too strict, with veteran first-class players also eligible.
"My father loved cricket and he actually loved the people associated with the game, particularly the players," Packer said.
"I am satisfied that this, in a small way, is something in which his love for the game can linger and provide some useful support for its participants and administrators."
Packer said Boxing Day was a momentous occasion for his family, who were grateful for how the game paid tribute to Kerry Packer a year ago.
"Today is an emotional day for me," he said.
"A year ago today, my father died and our families were greatly honoured by the manner with which this ground and cricket in general honoured him by way of a minute's silence.
"It was a moving ceremony for all of us at home and this is the best opportunity I have to publicly express my family's gratitude.
"For some time, we have given some thought and been seeking some advice on how best to commemorate his name throughout cricket.
"My family and I have decided to create the Kerry Packer Foundation with a 10 million dollar fund."
Packer said he along with Cricket Australia chairman Creagh O'Connor and former CA chairman Denis Rogers would be directors of the foundation, with Rogers acting as the chairman.
"The intention of the fund is provide assistance for former Australian Test and one-day international players who have fallen on hard terms and may need some help," Packer said.
"I am not precluding long-standing first-class players in Australia who have served their states faithfully.
"It is also our intention for this fund to be used to assist promising young men and women who may be precluded from pursuing a career in cricket because of financial constraints."
Packer said he also wanted to help ensure young cricketers could pursue their studies while trying to develop their sporting careers.
He said he did not intend to make the recipients public and said the foundation would be self-funding.