The programme will reunite Hollywood star Val and Warwick - who worked together 25 years ago on the fantasy film Willow.
In the new film Warwick takes each of them under his wing in the hope of rebooting their careers.
Merchant - who is also directing the programme, along with Gervais - said: "I think fans of Willow are going be really surprised to see Warwick Davis and Val Kilmer reunited on screen. Almost as surprised as Val will be when he finds out what we're paying him."
Warwick said: "Ricky and Stephen's scripts are always a gift to play and the inclusion of Val Kilmer is nothing short of genius."
Life's Too Short - which will also include on-screen roles for Gervais and Merchant - will be screened on BBC Two in the spring.