The 34-year-old South Korean, whose music video is the second most watched YouTube clip in history, is the first east Asian pop star to address the historic organisation.
The rapper, whose full name is Park Jae-sang, was invited to address the Oxford Union by its president John Seung-yoon Lee, who is also South Korean.
The president and Psy are both from Gangnam -- the area (of the South Korean capital Seoul) where the eponymous hit song takes its name.
Psy is already an established star in South Korea with six albums under his belt, but the song -- which parodies the extravagant lifestyle of the residents of Gangnam -- has turned him into a global star.
His address to the Oxford Union, due later on Wednesday, was to be his first public speech in English.
His new album is set to feature a new single half in Korean, half in English and a selection of songs from his 12-year career in his home country.
South Korea awarded Psy on Tuesday with one of its highest cultural honours, the Okgwan Order of Cultural Merit, as a reward for taking the world by storm.
He said:
The YouTube video never targeted foreign countries. It was for local fans.
My goal in this music video was to look uncool until the end. I achieved it.
The video's popularity owes much to Psy's zany outfits and outlandish dance moves.
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