Davies – whose only previous appearance at the finals was as a fan – will meet Littler on Sunday, 21 December.
The 18-year-old darts sensation has won the World Matchplay, World Grand Prix, UK Open and Grand Slam in a remarkable 12 months which started with World Championship glory.
Davies says Littler is a “different breed” but is looking forward to the challenge in front of him.
“There’s no games easy here, we’re all here because we deserve to be,” said Davies.
“But Luke on the other hand, he’s a different breed, isn’t he? He’s blown the sport to a different dimension.
“I’m going to be the underdog in every single game I play. I haven’t got a tour card and people say this, that and the other, but I deserve to be here.
“I’ve won my first game and now Luke’s next. I’ll try my best and see what happens.”