The cash was raised in barely more than two months, earlier this year, on a GoFundMe online appeal to raise money for his treatment.
Charlie's legacy will be to help other children after the cash donated by tens of thousands of people could not help him before he died last month.
His parents Chris Gard and Connie Yates said today: 'We feel that the foundation will be a lovely legacy for Charlie, and we hope that you will all continue to support us in honouring the life of our little warrior as he helps other poorly children and their families'. The couple had appealed for cash to cover Charlie's medical bills on a GoFundMe page more than six months ago.
More than 84,000 people have donated money.
'Our beautiful Charlie has been blessed with hundreds of thousands of supporters from around the world. We are so incredibly grateful for all your continued love and support, and would like to take this opportunity to advise you of what we shall be doing with the money raised for Charlie's cause,' said the couple in a statement posted on a GoFundMe page. 'In the following weeks we will be setting up The Charlie Gard Foundation: a foundation that will help other children with mitochondrial diseases, and rare childhood illnesses.
'Too many children are losing their fight against rare medical conditions, which emphasises the need for more research, and we hope we can help deliver this through Charlie's foundation.
'We also intend on becoming a hub of information for parents that may find themselves in a situation like ours. There needs to be more clarity for parents about parental rights when it comes to making life-saving decisions about their children.
'Access to medical treatment, and expert clinicians, should never be denied if funds are available. We will be looking at ways in which we can help make things clearer for families and hospitals alike'. Charlie's plight saw thousands of supporters - known as Charlie's Army - lending their voices and money to see the child given treatment, with £1.35 million raised on an online fund-raising site.
'His legacy will be to support other young children and families faced with similar circumstances.'
Grant Armstrong, for the family, told the High Court: 'Charlie has waited patiently and peacefully for his right to receive treatment to be realised. Sadly, due to the considerable delay…the window of opportunity has been lost for Charlie.'