The tournament, consisting of four 12-minute contests, will be hosted on February 15 by the Los Angeles Clippers at Intuit Dome, which opened last year in Inglewood, California.
Two teams would play in the first game, with the third team facing the winner of the opener, then the loser of the opener.
The championship game will match the top two teams based on records or point differential.
Each team will have a minimum of eight players, so the All-Star selection process to determine 24 players - 12 from each conference - will change only so that all players will be chosen regardless of position.
"I actually love it," retired NBA star Carmelo Anthony said. "The players are used to positionless basketball. You can see five guards on the court. I love the idea of the best players getting chosen in the All-Star Game.
"It brings excitement. That brings a lot of culture back to the game. All-Star should be the best players no matter what position."
Another retired NBA star, Vince Carter, noted how tough qualifying could be for talented big men with multi-skilled playmakers starring for many clubs.
"Now that big man sits there and it's a lot harder," Carter said. "Harder for a big man to have an opportunity because there are a lot of great guards in the league.
"It's going to be tough for that big man to crack that 24."
Five players to be honored as "starters" will be selected from both the Eastern and Western conferences with fans having 50% of the vote, players having 25% and a media panel having 25%.
Seven players from each conference named as reserves will be selected by NBA head coaches.
The process for assigning US players to one team or the other will be determined at a later date, the league said.
Should the All-Star voting not result in 16 US players and eight international players being chosen, NBA commissioner Adam Silver will select additional All-Stars to join either group to reach that minimum, which could give one roster more than eight players.
Last year's NBA All-Star Game included such international players as Oklahoma City's Shai Gilgeous-Alexander, a Canadian star and reigning NBA Most Valuable Player; French center Victor Wembanyama of San Antonio, Serbian center Nikola Jokic of Denver, Greek center Giannis Antetokounmpo of Milwaukee, forward Pascal Siakam of Indiana and Turkish center Alperen Sengun of Houston.