In an accompanying video, the silver screen star explained that the dress holds a lot of memories and would prove a welcome addition to anyone's wardrobe courtesy of its vintage style.
"It was a hand-beaded Calvin Klein dress," Paltrow said in the clip. "I wore it to the Oscars the year after I won [Best Actress for 1998s Shakespeare in Love]. And it's very end-of-the-'90s - which is very back in style now."
The 47-year-old then went on to challenge Drew Barrymore and Cameron Diaz to take part in the challenge.
Paltrow's generous donation is in partnership with the All In Challenge, an organisation which auctions off A-list items or experiences to raise money for charities including No Kid Hungry, Meals on Wheels and World Central Kitchen.
The highest bid currently stands at $6,250.00 with 11 days left to go.