Each artist will perform one track from their album.
Leader of Newcastle City Council, Karen Kilgour, said the success of the MOBO Awards showed "what Newcastle was capable of".
"We can't wait for the national and international music spotlight to shine on our fantastic city, showcasing our burgeoning music industry, hugely talented musicians and amazing venues," she said.
A week of events - the Mercury Prize Newcastle Fringe by music agency Generator - will also begin in the city on 9 October.
This will include workshops, industry events and performances from local artists and a choir of eight to 12 year olds across seven local authority areas.
North East Mayor Kim McGuinness said: "We've seen Sam Fender rise from our own music community and I want to make sure he's just one of many incredible local talents that succeed."
London North Eastern Railway (LNER) will be providing a special named service for the event, transporting judges and guests to the arena.
Newcastle department store Fenwick will also reveal bespoke windows showcasing the 12 Albums of the Year on 13 October and host two events as part of the Mercury Prize Fringe.
The Mercury Prize shortlist and winner is decided by a panel of industry experts.
Unlike the Brit Awards, which recognise commercial success, the Mercury Prize seeks to reward artistic achievement.
Primal Scream were the first winners in 1992, with the accolade going to Leeds band English Teacher last year.
PJ Harvey in 2001 and 2011, remains the only multiple winner.
The 2025 Mercury Prize 12 albums of the year are: