Livingstone will initially stand in for the 1pm-4pm weekday host Jeni Barnett, who will be away on holiday, from June 30 to July 4. He will then take charge of his own regular show, details of which are to yet to be confirmed.
The man who was ousted by Tory Boris Johnson will now have a platform to discuss his successor as well as issues such as transport, housing and crime.
Livingstone promised he would be the "perfect afternoon antidote" to LBC's breakfast host Nick Ferrari, who at one time considered running for mayor.
The hiring will help LBC grab headlines and most likely more listeners at a time when its popularity is already rising. The latest radio audience figures show its share of listening in London was up from 3.5% to 4.5% in one quarter.
Jonathan Richards, programme director at LBC, said: "Love him or hate him, Ken Livingstone is never boring."
Livingstone's move follows Boris Johnson's return to writing his weekly Daily Telegraph column, for which he reportedly earns £250,000 per year.
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