Organisers announced his inclusion on Saturday ahead of the draw for the tournament which has the strongest lineup in its 128-year history with 15 of the world's top 30 taking part.
Murray, who has been sidelined for almost a year since losing in the quarter-finals at Wimbledon last July, came through a practice session in London on Friday.
The Scot, who is a five-times champion at Queen's but has slipped to number 157 in the rankings, has been handed the toughest of all comebacks against world number 24 Kyrgios, who is a fine grasscourt player.
But the 23-year-old Australian has also struggled with injury and only returned last week from a two-month break with elbow trouble.
Canada's Denis Shapovalov, who takes on Gilles Muller in his first-round match, said of Murray's draw: "It's definitely another exciting match. Nick is playing some great tennis, I don't know if Andy is 100 percent back. It's a tough one."
Should Murray win, he may face British number one Kyle Edmund who plays American Ryan Harrison in the first round.
Murray has missed the last three Grand Slam events and had a hip operation in Australia on Jan. 8.
He hoped to make his comeback at last week's Libema Open in the Netherlands but pulled out because he was "not quite ready".
Murray's long-time rival Novak Djokovic is also playing at Queen's and has got a first-round match against a qualifier, with a potential tie versus Bulgaria's Grigor Dimitrov in the second round.
Defending champion Feliciano Lopez will play Luxemburg's David Goffin in the same part of the draw as Murray and Edmund.
However, Rafa Nadal, who won the French Open last week, will not take part as he continues his preparations for the Wimbledon Championships which begin on July 2.
(Reporting by Neil Robinson; Editing by Ken Ferris)
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