Abdelbaset Ali Mohmed al-Megrahi was jailed for the 1988 atrocity in which 270 people died when Pan-Am flight 103 exploded over the Scottish town.
The Scottish Criminal Cases Review Commission, which has been investigating Megrahi's case since 2003, recommended the second appeal.
In light of the review findings, the Libyan reiterated his innocence.
The commission is responsible for looking into possible miscarriages of justice.
It said the Lockerbie review, which cost £1.1m, was a "difficult" one to deal with.
The chief executive of the group, Gerard Sinclair, said it was the "longest, the most expensive and singularly most complex case we have had to investigate and review".
There were four main areas for referring the case back to court.
They included the "reasonableness" of the court's verdict; additional evidence; new evidence and "other" evidence.
Scotland's Lord Advocate Elish Angiolini said it was inappropriate for her to comment on the basis of the commission's decision.
Year away
However, she added that she had appointed Ronald Clancy QC and advocate Nick Gardiner as the Crown's counsel in the event of an appeal going ahead.
It is likely to be held in Scotland before a panel of three judges and is unlikely to be heard for about a year.
The commission had the option to refer the case to the High Court for a second appeal or reject the submissions by Megrahi's lawyers.
The Glasgow-based body looked at the way Megrahi's defence was carried out, as well as the way the panel of three judges handled the case.
Announcing the decision, the chairman of the commission, the Very Reverend Dr Graham Forbes, said: "The commission has a very special role within the Scottish criminal justice system and has been given extensive statutory powers to enable it to carry out this role.
"The function of the commission is not to decide upon the guilt or innocence of an applicant.
"We are neither pro-Crown nor pro-defence. Our role is to examine the grounds of review identified, either by the applicant, a third party, or by our own investigations, and to decide whether any of the grounds meet our statutory test."
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He added: "I was not involved in the Lockerbie bombing whatsoever.
"I am confident that when the full picture is put before the ultimate arbiters, the Lords Commissioners of Justiciary, I shall finally be recognised as an innocent man."
Scotland's First Minister Alex Salmond said the ability to look into alleged miscarriages of justice was a vital part of the criminal justice system, adding that it was now time to allow the independent legal process to take its course.
He told the Scottish Parliament: "Let us never forget that 270 men, women and children lost their lives in December 1988. Whatever the eventual outcome of this process, their loss can never be recovered."
Lawyers representing Megrahi have always maintained he was the victim of a miscarriage of justice.
He has already had one appeal following his conviction in January 2001.
That was heard at Kamp van Zeist, the former Dutch air base where he and his co-accused, Al-amin Khalifa Fhima, were tried.
Mr Fhima was acquitted and flew home to Tripoli.
Megrahi's appeal was rejected in March 2002 and since then he has been held in Gateside Prison in Greenock.
On 21 December 1988, the Boeing 747 was en route from London to New York when it exploded in mid-air.
All 259 people on board were killed, along with 11 people on the ground.
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