Seaman William Williams was awarded the medal for his part in sinking a German U-boat during World War One on 7 June 1917.
The new stone will be unveiled in Amlwch during a ceremony marking the centenary on Thursday.
His family and local officials will be among those attending the service at Amlwch Port's park at 11:00 BST.
Seaman Williams was on board the Q-ship HMS Pargust.
Q-ships were disguised as merchant navy ships which would lure German U-boats in and then counter attack with their hidden weapons.
HMS Pargust was torpedoed and Seaman Williams held the ship's heavy gun port in place for about 30 minutes until the U-boat surfaced and they could open fire.
It was the first ship to receive the Victoria Cross (VC) from King George V and Seaman Williams was unanimously chosen by his crewmates to receive the medal.
After his service in World War One, he returned home to Amlwch and later settled in Holyhead. He died in October 1965.
Anglesey council chairman Richard Jones, who will unveil the memorial stone, said he "gallantly served his country".
"We're proud to say he was from Amlwch and pleased to honour him with a new centenary commemoration stone," Mr Jones added.
The ceremony forms part of a centenary commemoration scheme honouring 628 recipients of the VC during World War One.
The only man from an Anglesey town to be awarded the Victoria Cross is being honoured with a commemorative stone.