The match, to be held Oct. 1-13 in Jerusalem, will pit Kasparov against Deep Junior, the work of Tel Aviv programmers Amir Ban and Shay Bushinsky.
The program, winner of the 7th Computer Chess Olympiad in Maastricht, Netherlands in July, hasn't lost a game to a human opponent in two years.
Titled "Man vs. Machine The Sequel," the Jerusalem match will consist of six games. The winner will walk away with $300,000, the loser $200,000. A tie will result in an even split of the prize money.
Regardless of the outcome, Kasparov will get an "appearance fee" of $500,000 just for showing up.
Kasparov's matches with IBM's Deep Blue computer gained widespread attention in 1996, when he won, and then again in 1997, when he lost.
Man versus computer chess showdowns have proved fodder for old debates about the viability of artificial intelligence and the potential of computers to "think," rather than process vast amounts of data quickly.
"This momentous match will test the latest advances in artificial intelligence by pitting the world's number one human chess player, Garry Kasparov, against the reigning World Computer Chess Champion program, Junior," David Levy, president of the International Computer Games Association (ICGA), said in a statement. "The advances made in recent years by the Junior programmers are truly remarkable and I expect the match to be a very close contest."
Deep Junior, a commercially available application that sells for less than $100, launched as "Junior" in a single-processor version in 1994. In 2000, the dual-processor version of Deep Junior launched and subsequently won a world title in August 2001.