The UFC announced the matchup July 6.
The 35-year-old Melendez ruled Strikeforce, suffering a single loss to Josh Thomson before moving to the UFC. After suffering a narrow split-decision to then UFC lightweight champion Benson Henderson in 2013, Sanchez rebounded with a decision over Diego Sanchez. Losses to Anthony Pettis, Eddie Alvarez and Edson Barboza prompted the decision to move to 145 pounds.
Stephens is also trying to rebound from decision losses to Frankie Edgar and Renato Carniero.
UFC 215 is scheduled for Sept. 9 at the Rogers Place in Edmonton, Alberta.
Heavyweights Francis Ngannou and Junior dos Santos collide in the main event.
The current card includes:
Francis Ngannou (10-1-0) vs Junior dos Santos (18-5-0)
Gilbert Melendez (22-6-0) vs Jeremy Stephens (25-14-0)
Henry Cejudo (10-2-0) vs Wilson Reis (22-7-0)
Ilir Latifi (12-5-0) vs Tyson Pedro (8-0-0)
Gavin Tucker (10-0-0) vs Rick Glenn (19-4-1)
Ashlee Evans-Smith (5-2-0) vs Sarah Moras (4-2-0)
Luis Henrique Barbosa de Oliveira (10-3-0) vs Arjan Bhullar (6-0-0)
More bouts are expected to be announced.