The fight, which will be the main event on the card of the first UFC event in the city in almost 20 years, was announced by UFC president Dana White on Monday night.
The 28-year-old McGregor, who became featherweight champ when he knocked out Jose Aldo in just 13 seconds last September, has yet to defend that title.
He set his sights on the lightweight title, but his plans to take that title were scuppered when then-champion Rafael Dos Anjos had to pull out of a March 5 fight in Las Vegas due to injury.
Since then Brazilian Dos Anjos has lost the title to American Alvarez, while McGregor engaged in two epic welterweight battles against Nate Diaz, losing for the first time in the UFC in March before gaining his revenge in August.
The lightweight fight is the third on the UFC 205 card, which also features Tyron Woodley against Steven Thompson for the welterweight title, and a women's strawweight matchup between Joanna Jedrzejczyk and Karolina Kowalkiewicz.
(Reporting by Philip O'Connor in Stockholm, editing by Nick Mulvenney)
