The Chanel designer will create a small, limited collection of four women's styles for the brand. The collaboration will last for four seasons, with the first unveiled in March.
Melissa has worked with celebrated international designers in the past, including Jean Paul Gaultier and Vivienne Westwood.
Lagerfeld pioneered the now-common trend of top-name designers teaming up with off-the-rack fashion labels when he worked on another so-called capsule collection, for Swedish fast fashion label H&M in 2004. He has also done several of the small collections for high-end Italian shoe company Hogan.
In addition to his work as Chanel creative director, Lagerfeld designs for Fendi and his own eponymous label. The Karl Lagerfeld label announced the collaboration in a statement released Monday.