This year’s winner will be announced at a ceremony at the Hammersmith Apollo in London, which will be hosted by Radio One DJ Annie Mac.
The event will see live performances from some of the 12 shortlisted acts, including Florence and The Machine, Jorja Smith and Nadine Shah.
Also in the running for the award are Everything Everything, Everything Is Recorded, King Krule, Novelist, Sons of Kemet and Wolf Alice.
The shortlist, which aims to celebrate and promote the best of UK music and recognise artistic achievement across an eclectic range of contemporary music genres, was chosen by an independent panel of judges.
South Tyneside singer-songwriter Shah’s Holiday Destination is currently the bookmaker’s favourite to win.
The album features post-punk songs that address gentrification, the refugee crisis and the failure of politicians in the north of England.
Also hotly tipped is The Ooz by King Krule, which crosses the boundaries of trip hop, R and B, hip hop, punk rock and jazz.
Arctic Monkeys are the only previous winners in this year’s field with Tranquility Base Hotel and Casino, their sixth number one album in the UK.
The Sheffield rock band, fronted by principal songwriter Alex Turner, picked up the prize in 2006 for their debut album Whatever People Say I Am, That’s What I’m Not.
Just three of the 12 shortlisted albums this year are debuts: Jorja Smith’s Lost And Found, grime artist Novelist’s Novelist Guy and record producer Richard Russell’s compilation project Everything Is Recorded.
Other previously shortlisted acts that are once more in contention are indie band Everything Everything, Florence and the Machine and London alternative rock band Wold Alice.
The Mercury Prize was first given out in 1992 to Primal Scream for Screamadelica and last year’s winner was Process by singer and record producer Sampha.
Coverage of the prize will be broadcast on BBC Four from 9pm to 10.15pm and on BBC Radio 6 Music with Tom Ravenscroft from 7pm to 10pm.