Khan, who held both the WBA and IBF titles, will take on the former kickboxer in New York???s Barclays Center on Friday, May 29.
The Briton had been hoping to secure a showdown with Floyd Mayweather or former stable mate Manny Pacquiao, but his hopes were dashed when the pair agreed to meet in their eagerly-awaited superfight on May 2.
Khan will instead take on Algieri in front of the American???s home fans aiming to claim his fifth straight win at 147lbs since suffering back-to-back stoppage defeats to Danny Garcia and Lamont Peterson.
The 28-year-old will return to the ring following a unanimous points win over Devon Alexander in December, while Algieri will aiming to bounce back after he was handed his first defeat of his career by Pacquiao.
The Filipino superstar floored Algieri six times before claiming a unanimous decision in Macau in November to end a run of 20 straight wins for the 31-year-old.
Algieri had earned a crack at Pacquiao???s WBO welterweight title after upsetting Ruslan Provodnikov in June last year to win the organisation???s light-welterweight strap.
“I have happy memories of New York having made my successful US debut there against Paulie Malignaggi in 2010,” said Khan, who had previously announced the fight on his wife’s YouTube channel earlier this month.
“I’m delighted to now be fighting there once again against another champion in Chris Algieri.
???Algieri has shared the ring with some tremendous fighters and shown great skills in those fights so I know I will need to be at my very best when we meet.???
Algieri said: “I am very excited to get back into the ring and to be fighting here in New York,”
“Fighting at Barclays Center, where I won my world title just under a year ago, is an added bonus.
???Amir Khan is a tested champion and is the match-up that I wanted. I believe this is a fight that will bring the best out of me.”??