Her announcement came shortly before she was to go on trial for the third time for alleged ties with armed Kurdish rebels.
"We former MPs ... want to serve democracy and peace. For this reason we are launching the popular democratic party," Zana told reporters on Friday .
Zana was the first Kurdish woman ever elected to Turkey's parliament and has been awarded the European Parliament's Sakharov Prize for Human Rights.
She was accompanied on Friday by Hatip Dicle, Orhan Dogan and Salim Sadak, three other former Kurdish parliamentarians who, like her, were sentenced in 1994 to 10 years in prison.
All four politicians are due later in the day to go before an Ankara court for a retrial after their convictions were overturned.
The fundamental principles of the as yet unnamed party, would be to "support Turkey's European process" and "achieve a peaceful and democratic solution" to Kurdish demands for more cultural and political rights, she said.
European Union leaders will decide on 17 December whether to heed the recommendation of the EU's executive, the European Commission, and start negotiations with Ankara on Turkey joining the 25-member bloc.
Zana's husband Mahdi is a
prominent Kurdish politician
Zana said that neither she nor her three colleagues would stand for the chairmanship of the new party, which would also work for a change to the constitution to take into account the country's "ethnic and cultural diversities".
"No political party has been able to respond to the demands of the people for social change," Zana said. "The world has changed and Turkey cannot be kept away from this change."
Zana last week belatedly received the European Parliament's Sakharov prize for human rights, awarded to her in 1995 while she was in jail.
Zana was reunited in Brussels with her two children and husband Mehdi Zana, a prominent Kurdish politician himself, who has lived in exile for nine years.
In a legal saga closely watched by the EU, Zana and her colleagues have already been convicted twice - in 1994 and 2004 - and spent a decade in prison for being a member of the outlawed Kurdistan Workers Party (PKK).
Fighting between the separatist PKK, now known as Kongra-Gel, and the army claimed some 37,000 lives between 1984 and 1999, when the PKK announced a unilateral ceasefire. It called off that truce earlier this year.
The activist was imprisoned for
being a member of the PKK
Zana and her colleagues were unexpectedly released in June, just one month before an appeals court overturned their convictions on procedural grounds and ordered a new trial.
Their lawyer, Yusuf Alatas, said the new trial would be no more than a "formality" and stressed that whatever the outcome, his clients would not go back to jail, thanks to a recent overhaul of the country's penal code.