At least seven heads of state or government are due in the Ethiopian capital on Tuesday to attend the inauguration ceremony for the council, based on the similarly named UN body and which officials tout as the institution that does most to distinguish the two-year-old AU from its predecessor, the Organisation of African Unity.
"The AU has more mandate than before," AU Peace and Security Commission Said Djinnit said last month.
"We are going to start intervening in conflicts in member states and this is prompted by the 1994 genocide in Rwanda, when the international community did nothing."
The 15-member PSC - which has been meeting regularly since March - is empowered to mandate peacekeeping missions in conflict areas where ceasefire accords have been signed and to recommend to the assembly of AU heads of state that troops be deployed uninvited in cases of genocide, war crimes and crimes against humanity.
The council has already met on the issue of Darfur, a war-ravaged region in western Sudan where forces allied to the Khartoum government stand widely accused of targeting civilians.
About 10,000 people have died and a million been displaced there since April 2003.
UN peacekeeping missions
In all, about 10 countries in Africa are facing conflict and there are currently six different UN peacekeeping missions deployed on the continent.
By 2010, the African Union hopes to have its own standby rapid reaction force of 15,000 men.
By 2010, the AU hopes to have
its own reaction force of 15,000
Djinnit believes that by ratifying the protocol establishing the PSC, "our leaders are showing and reaffirming their determination and commitment to handle Africa's problems by themselves".
The leaders at Tuesday's official inauguration - which coincides with Africa Day - will sign a declaration of commitment to take their responsibilities with regard to peace and security seriously.
They will then meet behind closed doors to discuss the situations in Darfur, Ivory Coast and Somalia.