Martin will replace Bruce Anstey in the team, who won last year's race.
McGuinness had been on his way to a third straight victory before suffering a technical issue, and eventually finished fourth.
The team said the duo, who will also be team-mates at Honda at the TT races, will target the first 120+mph lap.
McGuinness still holds the lap record for the class of 119.279mph (18:58.743), which he set on way to victory in 2015.
Martin, from Grimsby, missed last year's TT and North West 200 to compete in the 2,712-mile Tour Divide mountain bike race in the United States.
The 35-year-old has not raced since suffering multiple broken vertebrae and a fractured sternum in a crash in the Dundrod 150 Superbike race in 2015.
The truck mechanic and TV personality is still looking for his first TT victory, having finished on the podium 16 times.

Google confirmed the plan to the BBC's Newsround programme, saying it wanted to focus on "formats that work well for both users and advertisers".
Long unskippable adverts are seen as a nuisance by many viewers, and Google has introduced shorter formats.
One media agency said the move reflected the difference between online video and linear television services.
"The 30-second ad is a legacy from TV times," said Will Smyth, head of media at the Agenda21 agency.
"It's a standard TV unit which has been put online, but it's not the most effective way to advertise.
"This will encourage advertisers to be more creative about the way they use the platform."
Many other websites, including the BBC's international offer, feature unskippable 30-second ads on video content.
"Demand from advertisers for video content is high, but there's a shortage of quality content," said Mr Smyth.
"It's good business for everyone to focus on 'skippables' - people aren't forced to sit through ads, and advertisers don't need to pay if their ad is skipped."

Latham smashed Colin Ackermann for six to reach his hundred but was caught behind off Neil Dexter for 124.
Opener Steel went on to make his century off 242 balls, before passing his previous first-class best of 128.
Dieter Klein claimed a couple of late wickets but Steel ended unbeaten on 145 as Durham closed on 324-4.

The "fully-guided" tours will take place at weekends, when the specially-built set on the Harewood Estate in Leeds is not being used for filming.
They will take in "the familiar haunts of Home Farm, Bob's Cafe and The Woolpack", a spokeswoman said.
She added they had been launched as a result of the "incredible success" of the Coronation Street tours.
About 850,000 visitors looked around the famous cobbled streets of Weatherfield before the tour was closed to allow redevelopment of the site.
Emmerdale moved to the purpose-built set in 1998 after the number of fans visiting its original location, the West Yorkshire village of Esholt, made filming difficult.
The new tours will take place on 10 Saturdays in April, July, August and October.
The head of ITV North, John Whiston, said the set was "a unique and special place", which the company were "excited to be able to show off to a select number of visitors".
Unlike those at Coronation Street, the Emmerdale tours will not offer the chance to see the interior sets, which are housed at studios near Leeds city centre.
Guy Martin and John McGuinness will race for the Japanese-based Mugen team in this year's TT race for electric-powered machines.
[NEXT_CONCEPT]
YouTube is to scrap "unskippable" 30-second advertisements on the video-streaming service, from 2018.
[NEXT_CONCEPT]
Cameron Steel and Tom Latham shared a 234-run first-wicket stand as both scored centuries to help Durham dominate against Leicestershire.
[NEXT_CONCEPT]
Soap fans will be able to take a tour of Emmerdale from April, ITV have announced.