Sherk announced the matchup on Thursday in an interview with wicombatsports.com.
Sherk (33-4-1) was stripped of the lightweight title in 2007 after testing positive for steroids and has gone just 1-2 since returning to action, earning a win over Tyson Griffin last October while suffering losses to BJ Penn and, most-recently in May, Frankie Edgar.
Oliveira (9-2) had his three-fight winning streak stopped in his UFC debut in September, suffering a unanimous decision to Nik Lentz at UFC 103.
UFC 108 is headlined by a matchup between heavyweight contenders Antonio Rodrigo Nogueira and Cain Velasquez and also includes Rashad Evans vs. Thiago Silva, Junior dos Santos vs. Gabriel Gonzaga, and Carlos Condit vs. Paul Daley.
Pictured: Sean Sherk