The film, which will have its world premiere at Cannes Directors' Fortnight, is part of a selection of "cutting-edge" movies from India and the UK to be featured in the festival.
Speaking about the lineup, festival director Cary Rajinder Sawhney said: "We aren't just showing Indian films for Indian audiences, but opening the door to the rich diversity of cinema in India today, to all audiences.
"Some of these films are kicking out the old stereotypes of Indian cinema, while the best filmmakers are starting to be recognised on the world stage, where they belong.
"It's great to be premiering these cutting-edge new films in London, during a year when the city is celebrating its cultural richness."
Based on real-life events, Gangs of Wasseypur is a revenge story set in the dynamic socio-political milieu of Bihar.
The festival, which is supported by Film London, will stretch citywide, opening in the West End at the Cineworld Haymarket and continuing at BFI Southbank, Watermans, Cineworld Trocadero, Feltham, Wood Green, Wandsworth, the O2 and ICA.
The festival is also teaming up with the Tate Modern to present a rare showcase of Indian experimental film, curated from Bangalore.
The London Indian Film Festival's full programme of events and screenings will be released on May 21.
The festival will run from June 20 to July 3.