Alvarez (25-3) will attempt to defend his 155-pound title against Chandler (12-1). The series between the two currently stands at 1-1.
"Sometimes when you put two of the greatest fighters on earth in the cage together, they just give you artistic majesty," Bellator CEO Bjorn Rebney said. "I can't wait to see this fight."
In their first meeting, in November 2011, Chandler took the title from Alvarez via fourth-round submission in what Rebney called "the greatest fight I have ever seen cageside."
Alvarez returned the favor in the rematch, defeating Chandler at Bellator 106 via split decision in another back-and-forth title bout. The event was originally scheduled for pay-per-view but moved to Spike TV following an injury to headliner Tito Ortiz.
"I'm very motivated," Chandler said. "The last loss left a bitter taste in my mouth. I'm excited to do it again. This is a fight fans want to see. It's a chance for redemption. Every time myself and Eddie step in the cage, it's a war."
No venue has been announced for the event.
Alvarez, who has won three in a row since the Chandler loss, said that after spending nine rounds in the cage with Chandler, he has figured him out.
"I think me and my team created a blueprint -- a way to figure out Mike Chandler," Alvarez said. "We'll leave it up to his guys to make the adjustments."