The age-grade competition will be organised in the Valencia region at the Campo de El Pantano, a rugby stadium located in Villajoyosa, from 14-27 September.
It will be the first time Spain and the Federación Española de Rugby (FER) organise the tournament.
The World Rugby U20 Trophy has provided a platform for the future stars of the game to shine since its introduction in 2008, with almost 500 players having graduated from the pathway to play test rugby.
Some of the most high profile graduates are Canada captain Tyler Ardron, Uruguay captain Juan Manuel Gaminara, Japan number eight Kazuki Himeno, Georgia fly-half Lasha Khmaladze and Fiji scrum-half Frank Lomani.
They were among the 107 U20 Trophy graduates named in Rugby World Cup 2019 squads.
World Rugby Chairman Sir Bill Beaumont said: “Our U20 Championship and Trophy events are cornerstones of the player development pathway to test rugby. The U20 Trophy has nurtured some of today's best talents and I’m sure it will be no different in 2020.
“We are delighted that Spain will organise the Trophy. I know that they will be exceptional hosts and provide the teams with a superb environment to perform.”
FER President Alfonso Feijoo said: “It is a great honour for the Federación Española de Rugby to host one of the main global tournaments organised by World Rugby at the Comunidad Valenciana. We are confident its organisation will be a success, bringing momentum to accelerate Spanish rugby’s development, especially in the Valencia region.
“I would like to say a special thank you to the Trinidad Alfonso Foundation, given their immense support throughout the whole bidding process, without whom we wouldn’t have brought the World Rugby U20 Trophy to Valencia.”
Hosts Spain will be joined by Scotland, who were relegated from the U20 Championship earlier this year after finishing 12th, with the remaining six places determined by regional qualification tournaments.
Spain have only competed in the tournament once, in 2016 when they suffered a heart-breaking 38-32 loss in sudden-death extra-time to Samoa in the final. Eight members of that squad have since graduated to play test rugby for Los Leones.
The winner of the U20 Trophy will be promoted to the World Rugby U20 Championship in 2021, replacing the team finishing bottom of the 2020 edition in Italy next June.