Interested groups have until 14 July to submit their proposal online before the applications are considered and the winning entries announced.
Entries will be judged on a number of criteria, including originality, creativity and benefit to the community.
The competition follows the successful donation of a previously decommissioned yellow school bus to Greswell Primary School in Denton last year. Using lottery funding, the school transformed the bus into an outdoor library that is used by both students and the wider community.
The bus was donated after two pupils, 11-year-old Mia Goodison and 11-year-old Louie Williams-Manby, wrote to TfGM asking for the bus on the basis that it would encourage more children to read.
Councillor Mark Aldred of the Greater Manchester Transport Committee said: “Our yellow school buses are a fantastic service that allow children to get to school cheaply, safely and securely but, even when their life as a school service comes to an end, they can still be incredibly useful to communities.
“Greswell School set an inspirational example of what can be done with the buses and we’re looking for people to engage their creative sides and tell us how they can make use of their own donated vehicle.
“I look forward to seeing a variety of creative and community-spirited projects developing in the near future.
John Cooper, Head of Greswell Primary School said: “The library bus has been a massive success for our school and has proved to be very popular, helping to inspire our children and raise the profile of reading and writing.
“This donation from TfGM was the biggest step on our journey and we are all extremely appreciative of the support they have given us.”
Yellow School Buses are a service provided by TfGM for secondary school children in Greater Manchester. They are easy to spot, alerting road users that children will be getting on and off and offer a guaranteed seat and a regular driver.
Pick-up and drop off points for children are usually close to home and always in a safe place, offering additional peace of mind.