UFC officials announced the move on Tuesday.
Larsen (8-4) was initially slated to face Matt Grice at UFC 166. Grice, however, was in a car accident over the weekend, and currently remains hospitalized following brain surgery.
With Payan and Grice both injured, UFC officials decided to put Oliveira and Larsen together.
Larsen and Oliveira are likely fighting to remain on the UFC roster.
Entering the fight off of back-to-back losses to Joe Proctor and Lucas Martins, Larsen has yet to find any success in the Octagon.
Oliveira (16-4) has also lost his last two fights, albeit to former lightweight champion Frankie Edgar, and featherweight title contender Cub Swanson. He maintains a 4-4 record with one no contest during his UFC tenure.
UFC heavyweight champion Cain Velasquez and challenger Junior dos Santos meet in the UFC 166 main event to try and settle their trilogy, each holding a victory over the other.