The month-long event is being staged at the Roundhouse in Camden, north London, throughout September with entry free to ballot winners, and performances also screened online.
The festival, now in its eighth year, will also feature shows by artists such as Robert Plant, Calvin Harris, Beck and 5 Seconds Of Summer among more than 60 acts on the bill.
Kylie said of her September 27 date: "Playing London is always special and playing the Roundhouse is going to be amazing. It's such an iconic and intimate venue - I can't wait to put on a show for everyone."
The event also features a double bill of Blondie and Chrissie Hynde, while chart-topping star Sam Smith now has a chance to perform after being in the audience for one of the 2013 shows.
The Money On My Mind singer said: "Last year I was in the audience for Jake Bugg at the iTunes Festival. To think that I'm going to be doing it this year is so amazing."
Maroon 5 and David Guetta have also been booked.
Further details are at www.iTunesFestival.com