You should absolutely disclose the fact that you've worked with this candidate before. While ideally you'd have spoken up about that the moment you realised, it's not an issue as long as you still let the hiring manager or HR know as soon as possible. If some time has passed you can excuse the delay by claiming you wanted to confirm it was him or that you didn't make the connection immediately. Of course those excuses need to be plausible so it won't work if the candidate has a rare name or you worked with him recently.
As for whether you can still interview him, that depends on the relationship you had or have with the candidate. If you were close friends or otherwise feel that you'd be unfairly biased I'd argue that you should explain that to the hiring manager and indeed recuse yourself. But in most cases your feedback would be invaluable to a hiring manager and he'd almost certainly want to hear your opinion of the candidate as someone who actually worked with him. You'd of course preface your assessment if you felt the need to but in most cases you can still describe your experience in working with him by focusing on objective facts. But it's indeed good to be aware of potential bias you have that would drown out facts. If you despise the candidate for his personal choices but he's excellent at his job and collegial then it's unethical and unprofessional to sabotage his chances. But if this candidate rubbed everyone the wrong way and was a Grade A Jerk at work then that is something you can and should mention. Working Well With Others is part of being a good employee.
I get the impression that you're not a fan of this candidate and I'd encourage you to speak up if the reasons are important to his chance of success. If he's just someone you don't care for then I'd keep that to yourself, but if you legitimately dread working with him because he's lazy, incompetent or inconsiderate then that's something a hiring manager would definitely want to know.
If you feel uncomfortable discussing the candidate then you can simply say something like "I'd prefer not to comment on his performance / my experience working with him." Any hiring manager worth his salt will recognise the hidden message there, but of course bad hiring managers exist and you may not want to risk having that message go unnoticed.
In a comment you mentioned how you want to be as fair as possible and that you see a conflict of interest but that's really not an issue here. Your interests presumably align with those of your employer as the goal is to hire the right person for your team. The fact that you've worked with this person before is an advantage in that you can attest to his work ethic and interpersonal skills in a real environment rather than the more clinical circumstances of job interviews. There is nothing unfair about this: suppose this guy was a slob and never got any work done. Why would it be unfair to mention that objective fact to the hiring manager? He wouldn't get the job but that's entirely the product of his own behaviour at work. Keep in mind that a workplace is a professional environment and not a playground. There's not really such a thing as "telling" on people. If this guy was awesome at his job, friendly and had an amazing track record, wouldn't you say as much to the hiring manager? If the opposite were true, shouldn't you do the same and warn your company? In both cases the outcome is simply the result of the candidate's reputation preceding him. It's a good example of why this site and workplace mentors in general advocate remaining professional in all situations.
As Joe Strazzere rightly points out, in the end it's up to the hiring manager to decide your level of involvement in the rest of the process: "it also depends on the hiring managers. Some would want you to interview the candidate, using your insights from your prior relationship. Others would want to talk to you privately about the candidate. Still others would want you to bow out." So tell the hiring manager about the fact that you know the candidate and how well you knew his work and let the manager decide how to proceed from there.