Paris Hilton was not immediately available for comment on her grandfather's plans for his fortune.
Jerry Oppenheimer, who profiled the Hilton family in his 2006 book "House of Hilton," has said Barron Hilton is embarrassed by the behavior of his socialite granddaughter Paris and believes it has sullied the family name.
Barron Hilton, who is 80, has not commented on Oppenheimer's remarks.
The foundation supports projects that provide clean water in Africa, education for blind children, and housing for the mentally ill. Its aims, based on Conrad Hilton's will, are "to relieve the suffering, the distressed and the destitute."
"Speaking for the family as well as the foundation, we are all exceedingly proud and grateful for this extraordinary commitment," said Steven Hilton, one of Barron's sons and president and chief executive of the foundation.
Conrad Hilton established the foundation in 1944 and when he died in 1979 left virtually all of his fortune -- including, according to media reports at the time, a 27 percent controlling stake in Hilton Hotels -- to the charity.
But Barron Hilton challenged the will and after a nearly decade-long legal struggle reached an out-of-court settlement to split ownership of the shares with the foundation in 1988, The New York Times reported.
The hotel group was sold for $20 billion in October to private equity firm Blackstone Group , while the acquisition of Harrah's -- of which Barron Hilton was a board member until 2006 -- is due to be completed by Apollo Management and TPG Capital in early 2008.
Paris, a symbol of celebrity privilege in America, gained notoriety in 2003 when a home video of her having sex with a boyfriend was posted on the Internet.
She parlayed her notoriety, fueled by tabloid headlines about her partying lifestyle, into a celebrity career that has included a reality television show, a book, a music album, and film roles. Then this year she spent more than three weeks in jail for violating probation in a drunk-driving case.