US-based Albanian Prenga, 35, is a former kickboxer with a ring record of 20 wins and one defeat since he turned professional in 2016.
The fight, billed as "The Comeback", was announced on Monday by Saudi Arabia's General Entertainment Authority chairman Turki Alalshikh and will be broadcast live worldwide on DAZN.
Joshua, 36, has a record of 28 wins and four losses with his most recent fight a sixth-round knockout of American Jake Paul on December 19 in Miami.
"It’s no secret I’ve taken some time to consolidate and rebuild to be ready for stepping back into the ring and today is the next step on that journey," said Joshua.
"I’m delighted to have agreed a multi-fight deal starting with July 25th in the kingdom of Saudi Arabia. I’m looking forward to competing and picking up where I left off. The landlord will collect his rent. That is certain."
Joshua could also face former world champion Tyson Fury later in the year, with promoter Eddie Hearn telling Sky Sports television that he wanted a "tune-up bout" in July before facing Fury potentially in November.
"July and November are the two dates that have been presented to us now and we expect to move forward," he said. "Fury has just had his tune-up fight with 12 really vital rounds to get him sharp for the next one and I expect us to do the same."
Fury called for a showdown with Joshua after he outclassed Russia's Arslanbek Makhmudov on April 11.
"Next, I want to give you the fight you've all been waiting for. I want you AJ, Anthony Joshua, let's give the fight fans what they want, the Battle of Britain," he said then.