Shopkeepers on Moat House Lane East have organised the event which is being officially opened by Wolverhampton Mayor Councillor Sandra Samuels at 11am outside Lisa Lee Hair and Beauty.
There will be a children's funfair ride, face painting, games, hot food and arts and crafts stalls until the fun day finishes at 3.30pm.
Wednesfield South Councillor Bhupinder Gakhal, who has been chosen to carry the Queen's Baton for the Commonwealth Games, said: "We are all looking forward to Sunday as it will be a really family friendly fun day with lots to do.
"The shopkeepers on the parade are brilliant and I am grateful to everyone at Lisa Lee Hair and Beauty for pulling out all the stops."
He added: "We did something similar 11 years ago with money going to Help for Heroes which was a success. So after the last few years with lockdowns and all the various challenges it will be really nice for neighbours can have a nice chat while they tuck into some lovely food.
"All the money we raise will go to the NHS locally, and the fun day is a way of saying thank you to everyone in the NHS who were the real heroes of the pandemic."