The words for Be Mery were found "doodled" in the back of a monk's prayer book dating back to about 1500.
It is the only surviving book of its type from the East Sussex abbey, built on the site of the Battle of Hastings.
Visitors will be able to hear a recording of the song for the first time since the Reformation.
The carol was found by English Heritage historian Dr Michael Carter while he was researching the history of Battle Abbey.
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The service book is now in the library of Trinity College, in Cambridge.
Dr Carter said: "This carol is clear evidence that the Battle monks were very much part of the thriving devotional culture of Catholic England, a culture brutally cut short by the Reformation and the dissolution of the monasteries which extinguished 500 years of religious life at Battle.
"Our new exhibition has been designed to reveal insights into that life, the importance of prayer and worship, the tremendous power and wealth of the abbey and what it was like to be an ordinary monk there."
Be Mery has been performed and recorded for English Heritage by Schola Gregoriana: The Association for Gregorian Chant.
The new permanent exhibition opens on Saturday in the abbey gatehouse.
Source: English Heritage

The annual competition was expanded from two teams to six in 2015, with the top three Super League clubs facing their Southern Hemisphere counterparts.
But the format may now revert to one match featuring the two champions - Cronulla Sharks and Wigan Warriors.
NRL clubs completed a 3-0 whitewash over Super League teams in 2016.
Reports suggest a number of other NRL clubs are set to reject any invitation to take part in the competition.
Storm chief executive Dave Donaghy said: "We've decided that staying in Australia will provide our team with the best possible preparation for the 2017 NRL season.
"Having treasured past visits to the UK in 2008, 2010 and 2013, we thoroughly value the concept of the World Club Challenge. However, a regular NRL season is already incredibly taxing and, as a non-Sydney team, our players travel more than most.
"We have committed to playing two trial matches in Australia which we believe will serve as a better lead-in for the team."

News presenter Huw Edwards had been expected to front the show after Dimbleby said 2015's results coverage was his final time at the helm.
It will be the tenth occasion that Dimbleby has hosted proceedings, have first fronted the broadcast in 1979 when Margaret Thatcher became prime minister.
The programme will start on the night of 8 June and continue until morning.
Edwards will take over as lead presenter on the morning of 9 June and will also present the evening bulletin that day.
BBC director of news James Harding had said ahead of the 2015 general election that it would be Dimbleby's last time as lead anchor, with Edwards set to front the show from then on.
He said: "This snap election surprised the country and election night is bound to be one of the most closely followed in recent times.
"BBC's results night will once again offer people the most reliable breaking news, impartial analysis, with a host of trusted experts and above all our unrivalled presenting team."
Dimbleby, 78, who also hosts debate show Question Time, will be joined in the studio by Mishal Husain, Emily Maitlis and Jeremy Vine.
BBC experts including political editor Laura Kuenssberg and economics editor Kamal Ahmed will be giving their views on the proceedings as results come in.
The programme will be broadcast simultaneously on BBC One, the BBC News Channel and BBC World News.
A long-forgotten medieval carol has been set to music for the first time in 500 years as part of an exhibition about monks at Battle Abbey.
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NRL runners-up Melbourne Storm have rejected the opportunity to play in the 2017 World Club Series, preferring to stay in Australia during pre-season.
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David Dimbleby is to host the BBC's 2017 general election programme.