The title bout will co-headline the UFC pay-per-view at MGM Grand Garden Arena.
Rousey (9-0) successfully defended the title via first-round TKO over Sara McMann at UFC 170 in February. It was the first time the former U.S. Olympian in judo won a fight in a method other than an armbar.
In recent months, several names had been linked to Rousey as potential opponents, including former Strikeforce featherweight contender and Hollywood actress Gina Carano.
But the opportunity at the title officially goes to Davis (16-5), who defeated Jessica Eye via split decision in February. The 29-year-old Canadian has won her past five bouts, two by submission. ESPN.com ranks Davis the No. 5 pound-for-pound fighter in the world.
Rousey had expressed interest in a fight with Carano, whom she credits for peaking her interest in the sport, but maintained it was the UFC's decision. She offered praise toward Davis in February after they appeared on the same UFC 170 card in Las Vegas.
"I think Alexis Davis did an amazing job," Rousey said that night. "It's up to the UFC."
Rousey was crowned the first UFC female champion in late 2012. She held the 135-pound title in Strikeforce prior to that. She made a successful UFC debut in February 203, submitting Liz Carmouche via armbar in the first round.