Mayweather said the "weight class and rules" will be finalised in the coming weeks, refusing to confirm whether the bout will be under boxing or MMA rules.
Mayweather, undefeated across 50 fights, has never fought outside the US, making today's revelation even more astonishing.
Rizin CEO Nobuyuki Sakakibara reportedly said the MMA promotion was thrilled to have convinced Mayweather to take part in the "history-making event".
"First we had to convince Mr. Mayweather to come to the ring on the Rizin ring on December 31," he said. "As you know Mr. Mayweather is undefeated. But all his fights have been in the US. He has had a wish to fight outside the US.
"We're happy we've convinced him to come to Japan for this history-making event. In the second phase, once we knew Mr. Mayweather would be in the Rizin ring on New Year's Eve, we thought of the appropriate opponent and there was only one: Tenshin."
Understandably, the world was in shock over the surprise announcement.
Mayweather hasn't fought since defeating McGregor by TKO in the 10th round last August. Many on social media speculated the ageing star is coming out of retirement purely for a cash grab.
Mayweather posted a photo on Instagram wearing Rizin gloves shortly before Monday's big reveal.
Nasukawa is reportedly unbeaten and is fresh off a victory over former UFC fighter Kyoji Horiguchi in a kickboxing match.