Gaga, 28, will appear in the franchise's next installment "American Horror Story: Hotel" in her first recurring television role, reported E! online.
Paulson, a veteran of the horror anthology programme, said that the 'Do What U Want' singer's "theatrical" style is a natural fit for "American Horror Story: Hotel".
"What could be better? Lady Gaga couldn't be more theatrical. I think nobody does it better than Lady Gaga. She'll fit right in," she said.
The new season of "American Horror Story" will also include Wes Bentley, Matt Bomer and Cheyenne Jackson in main roles.
"American Horror Story: Hotel" is expected to premiere in October.