The exhibition game on Oct. 11 at the 16,000-seat Indian Wells Tennis Garden will be televised by TNT.
The game follows the NHL's successful outdoor game on New Year's Day in Buffalo, N.Y.
"What will happen here will be historic," Rick Welts, the Suns' president and chief operating officer, said Tuesday. "More importantly, I think this will be a lot of fun. Most of us learned how to play basketball outdoors. This had the perfect circumstances to do it in the NBA."
It won't be the first NBA game to be played outdoors. The Suns defeated the Milwaukee Bucks in a preseason game on Sept. 24, 1972, at a baseball stadium in San Juan, Puerto Rico.
Welts said the ideal weather in October and the facility made it possible to hold the event. The tennis stadium is home to the Pacific Life Open, one of the major events on the men's and women's pro tours.
Because the seating is built around the parameters of a tennis court, rather than a hockey rink like most NBA arenas, Welts said the game will offer a more intimate setting.
"It's an NBA-quality facility with no roof on it," Welts said.
Nuggets center Marcus Camby said he may have to work on his jumper to make it more wind resistant.
"I have a high release -- it's probably not too good outdoors," Camby said. "It will be fun. I've seen hockey have a couple of outdoor games, so it will definitely be interesting. I hope the weather's nice."
In the unlikely event the game is rained out, Welts said it would be played the next day.
Denver coach George Karl liked the concept of an outdoor game.
"I grew up playing outdoors and loved it," he said.
Karl was asked if chain-link nets would be a natural fit for the outdoor game.
"Or lopsided balls," Karl said with a laugh. "One of the biggest decisions was finding a ball that wasn't lopsided."
The Suns feature megastars Steve Nash, Amare Stoudemire and
Shaquille O'Neal. The team picked the Nuggets because of their marquee players, Allen Iverson and Carmelo Anthony, and because there are direct flights from Denver to Palm Springs.
Suns partner Richard Heckmann, who lives in the area, helped put the game together after it was suggested by someone from the local parks and recreation department.
In October, the Suns brought in a basketball floor to test the facility and found it suitable. Depending on ticket sales, Heckmann said an outdoor preseason game could be an annual event.
"It makes for an unbelievable stadium for basketball," he said. "The sight lines are equal or better than any arena in the NBA."
The Suns also considered staging the game at the USTA Tennis Center in Flushing, N.Y., but the weather then likely would be unsuitable.