Organisers said the Manx International Cycling Grand Prix held will see more than 140 professional riders compete.
Co-Director Richard Fletcher said the event will "showcase the island ahead of a second bid to host the British Cycling National Road Championships".
The island narrowly lost out to Stockton-on-Tees in its bid to host the 2016 Championships.
At the time British Cycling said it had been a "tough decision", but the fact Stockton has previously hosted a National Series event was a "contributing factor".
British Cycling's Jonny Clay said it had been "hard to choose between two strong bids".
Mr Fletcher added: "We have taken their feedback on board and we hope this new event will clearly demonstrate our ability to host a large scale cycling event.
"It will hopefully prove we can handle the logistics and have the roads to handle the national championships."
The new Isle of Man event will include both men's and women's races.
A three-lap men's race (113 miles) will form part of the British Cycling National Elite Road Race Series and the two-lap (75.5 mile) National Women Elite Road Race Series.
Clerk of the course Ollie Last said: "It will be a historic and long overdue return for professional cycling to the island with all the leading British teams taking part."
Amongst those in the men's field will be Team Sky's Ben Swift, along with Olympic gold medallist Ed Clancy and Ian Bibby.
Mr Fletcher said with the backing of government, the Isle of Man plans to host the event for two years before potentially submitting another bid to host the nationals in 2018.
The Isle of Man has produced the last two men's national road race champions in Peter Kennaugh and Mark Cavendish.
The island has a rich cycling history, having previously hosted rounds of both the National Series and National Championships as part of International Cycling Week.
Past winners include Tom Simpson, Steve Joughin, and David Millar.
The event will get under way at 13:25 BST from the TT grandstand on Sunday.
The first professional cycling event on the Isle of Man since 2003 will be held on the TT course this weekend.