UFC president Dana White confirmed the news Thursday during a media appearance at Madison Square Garden. The bout will headline the event.
Bisping (24-5) hasn't fought since April 2013 because of a detached retina. He had been scheduled to fight Mark Munoz in October but withdrew due to complications following surgery on the area.
Kennedy (17-4) will carry a three-fight win streak into the contest. He scored a first-round knockout victory in his last appearance, over Rafael Natal at UFC Fight Night 31.
The TUF Nations Finale will take place in Quebec City.