The 31-year-old Cypriot-born mixed martial artist - whose nickname is 'The Count' - is to play the late-night spinoff's bad boy character, an underworld gangster called Nathan.
A spokesperson for Hollyoaks production house Lime Pictures told DS: "We are delighted to confirm that UFC star Michael Bisping has been cast in this year's series of Hollyoaks Later which is due to transmit in October."
Producer Paul Marquess said: "We're remaining tight lipped on all story-line information but we can confirm that Michael won't be playing himself, but a strong, dangerous character that is set to cause trouble for two Hollyoaks residents. We are very excited about this year's Hollyoaks Later series and we're delighted that Michael will be part of the cast."
Bisping recently shot a part for action film Beatdown, which is due to be released on DVD later this year.
Read-throughs for the first couple of episodes took place earlier this week, while filming is expected to commence on the first of the five episodes in the coming weeks.
Other characters expected to be involved include Mercedes (Jennifer Metcalfe) and Malachy Fisher (Glen Wallace) as well as the soap's second new family The Costellos.
In April, Channel 4 commissioned a third series of Later following the successful second run.
Last year, former Hollyoaks boss Bryan Kirkwood - who is now executive producer at EastEnders - secured a dream cameo appearance from Welsh songstress Bonnie Tyler.
This year's instalment is being produced by Hollyoaks showrunner Paul Marquess.