"We came up with the video idea, and she thought he would be great in it."
His creator, comedian Sacha Baron Cohen, was flown to Hollywood to film the video to Music, the title track from the singer's new album, according to the Observer newspaper.
Madonna is said to have become a fan after a friend sent her a copy of his Christmas special, Ali G, Innit.
"She watched the tape and thought he was brilliant - the Peter Sellers of our generation," her manager, Caresse Norman, told the paper.
"We came up with the video idea, and she thought he would be great in it."
Ali G is said to appear in the video wearing his trademark yellow track suit and wraparound sunglasses.
The details are not being revealed, but Ali G is said to feature at the centre of a "strong storyline".
He is said not to contribute musically to the video - which will come as a relief to those who have witnessed him adding drums and bass to the music of guests on his show, including Chrissie Hynde and Travis.
'Respect' to John Humphrys
Baron Cohen's spoof chat show formula on Channel 4 began in a storm of controversy, after he invited unwitting politicians and other public figures onto the programme and floored them with embarrassingly naive questions.
Most of his guests are now in on the joke.
This week they included BBC news presenter John Humphrys, who was asked whether his early morning Today programme on BBC Radio 4 was designed mainly for people coming home from all-night clubbing.
Humphrys, 56, was also congratulated and given "respect" for the impending birth of his child.