Campbell's family personally requested McGraw, 47, to perform on the icon's behalf as he is suffering from Alzheimer's disease and will be unable to attend the awards ceremony, reported Rolling Stone.
The track has been nominated for an Academy in the best original song category.
"Glen was always a fan of his music and Tim is sure to bring great emotional depth to the performance," his loved ones wrote in a statement.
It will be McGraws's debut performance at the Oscars. Coincidentally, his wife, Faith Hill, performed at the 2000 Academy Awards, filling in for an ailing Whitney Houston.
The track, co-written with Julian Raymond, is a bittersweet love song that gives a silver lining to the memory loss that comes with Alzheimer's.
Raymond said he is elated at the nomination but at the same time sad that Campbell, 78, will not be able to comprehend the honour.
The Academy Awards will take place on February 22. Actor Neil Patrick Harris will host.
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