The five-round bout will serve as the co-main event on the UFC Fight Night card, which will be the promotion's first trip to Mexico since 2019.
ESPN has Moreno ranked No. 2 in the world at flyweight and Albazi at No. 4.
Moreno (21-7-2) is a former two-time UFC flyweight champion and the first-ever Mexican-born UFC champ. The Tijuana native dropped the title in a close split decision to Alexandre Pantoja at UFC 290 in July. Moreno, 29, was on a two-fight winning streak before the loss to Pantoja.
Moreno will also act as the official backup for the UFC 296 co-main event Dec. 16 in Las Vegas, sources told ESPN, confirming news first reported by Eurosport Netherland. Alexandre Pantoja will defend the UFC flyweight title against Brandon Royval, and if either competitor is forced to withdraw, then Moreno will step in and compete.
Albazi (17-1) has won six in a row, most recently a split decision win over Kai Kara-France in June. The Iraq native is a perfect 5-0 in the UFC. Albazi, 30, previously won titles in Ultimate Challenge MMA and FightStar Championship.
Moreno has not fought in his home country since becoming the first Mexican-born UFC champion in 2021.
"I want to go there and win and celebrate with my people and [wave] the Mexican flag," Moreno told ESPN. "It's something special for me. I'm Mexican. At the end of the day, I'm working for that. I want to give more opportunities to the Mexican fighters."