UFC president Dana White confirmed the bout to ESPN.com. The pay-per-view event is scheduled to take place June 15 at the MTS Centre in Winnipeg, Manitoba.
Barao (30-1) has made a name for himself while champion Dominick Cruz has been sidelined with a knee injury. He took the interim title last July with a decision win over Urijah Faber, and then defended it last month by submitting Michael McDonald.
The promotion had hoped Cruz (19-1) would return to unify the belts against Barao this summer. The 27-year-old hasn't fought since October 2011.
The title opportunity instead goes to Wineland (20-8-1), who is coming off a split decision win over Brad Pickett in December. The former WEC bantamweight champion is 2-2 thus far in the UFC, with losses to Faber and Joseph Benavidez.
The UFC 161 event will be the first ever in Winnipeg. Two light heavyweight bouts have also been announced for the card. Rashad Evans is expected to meet Dan Henderson, while Mauricio Rua takes on Antonio Rogerio Nogueira.