The American lost to Tommy Fury in February and had initially called for a rematch following his decision defeat in Saudi Arabia.
Paul and Diaz have frequently exchanged barbs on social media for months now and the latter will be making his boxing debut.
Still, the 37-year-old boasts a series of impressive wins on his record, including against the likes of Conor McGregor, Tony Ferguson and Anthony Pettis.
Paul, meanwhile, has beaten former UFC fighters in the form of Anderson Silva and Tyron Woodley during his professional fighting career.
During his win over Silva, Paul’s team are thought to have been involved in an altercation with Diaz’s team before the latter challenged the former to a fight.
The event, which will be broadcast on DAZN, will be held in Dallas, Texas on Saturday 5 August .
