World No 1 McIlroy invited Horan to caddie for him in the light-hearted Augusta event when they met in Australia last year, and Horan agreed to take up the chance.
It comes a year after the McIlroy gave the caddying responsibilities to his then fiancee Caroline Wozniacki for the par-three event.
Masters title favourite McIlroy said: “I’ve got Niall from One Direction caddying for me, which should be good fun. He’s been excited to come here. He’s never been to the Masters.
“I caught up with him in Australia at the end of last year and he was really excited, and I said, if you’re available Wednesday afternoon and you want to carry the bag for nine holes, you’re more than welcome.
“He’s excited to be here and (I am) looking forward to spending a bit of time with him out there.”
Horan, 21, hails from Mullingar in County Westmeath, Ireland, while McIlroy, 25, is from Holywood in County Down, Northern Ireland.
McIlroy is not the only player with an eye-catching caddie for the par-three contest.
Tiger Woods, preparing for his return to competitive golf after a recent hiatus, will warm up for the Masters with daughter Sam and son Charlie his nominated bag carriers.
Other famous names to have been bag carriers at previous par-three Masters events include former tennis players Andy Roddick, for Zach Johnson in 2011, and Chris Evert, for then husband Greg Norman in 2009.