The UFC made the announcement at its official site on Thursday morning, saying verbal agreements were in place for the fight. No official date or location has been announced for the fight.
Hughes (45-8, 18-6 UFC), a UFC Hall of Famer and one of the dominant champions in the sport's history, had won three straight prior to his quick loss to Penn at UFC 123, including a Fight of the Night grudge match win over Matt Serra and a Submission of the Night win over Ricardo Almeida.
After the loss to Penn, Hughes said he planned on taking time off to work on his farm in rural Illinois, hunt and be with his family. No stranger to long layoffs, Hughes has gone nearly a year between fights twice in the last three years.
Sanchez is coming off a controversial unanimous decision win over Martin Kampmann at UFC on Versus 3 last month. It was his second straight win and second straight Fight of the Night performance after a two-fight skid that saw him suffer a TKO loss to Penn for the lightweight title at UFC 107 and a return to welterweight to an upset loss to John Hathaway at UFC 114.
Sanchez was the Season 1 middleweight title winner on "The Ultimate Fighter" and has said he's a renewed fighter since rejoining Greg Jackson's team in New Mexico.