The dress will be auctioned in New York by Bonhams, a privately owned British auction house, this November and is expected to sell for between $800,000 and $1.2 million.
Despite the movie being released in 1939, three-quarters of a century later the sweat stains are still visible on the costume.
"What's great about this dress is you get the best of both worlds. There's evidence of usage with the sweat stains but also for a dress that's 75 years old, it's in fantastic shape," Catherine Williamson, director of entertainment memorabilia at Bonhams, told CNBC via phone.
Read MoreWill 'Oz' Yield Magical Opening for Disney?
Williamson forecast the dress would be a hit with bidders because of the movie's global appeal and because of the recent strength in the market for entertainment memorabilia.
"The market for entertainment memorabilia has exploded on the last three to four years. We have a lot of faith in the auction and what will go on sale," she said.
The blue gingham dress will be one of several items on offer at Bonhams' auction of Hollywood memorabilia on November 23.
Read MoreRoyal wedding cake slices up for auction