Bidding for the Mediterranean-styled estate on Miami Beach's prestigious Ocean Drive, just steps from the sea, is to start at $25 million, a Fisher Auction spokesman.
Auction organizers have said the sale has attracted interest from overseas buyers, including potential bidders from Russia and South America.
Casa Casuarina boasts ten bedrooms and 11 baths, mosaic flooring and an array of frescoes and murals custom-made for Versace.
Two rooftop terraces boast spectacular views of the beach and an observatory has everything one needs for an evening of star-gazing — cushions, armchairs and a bar.
Other luxury features include gold-plated bathroom fixtures and an open-air courtyard.
A suite once occupied by the designer himself contains a king-size bed, as well as a huge bathroom, a walk-in closet and even a small terrace overlooking the sea.
Versace, 50, was shot dead on the steps of the villa in July 1997 by serial killer Andrew Cunanan.
In the wake of the murder, the Italian fashion designer's family put the property up for sale and it subsequently changed hands in 2000 for $19 million.
Most recently, the villa has been a boutique hotel.
The mansion was built in 1930 by architect and philanthropist Alden Freeman in homage to a villa constructed in the Dominican Republic in 1510 by Diego Columbus, the son of explorer Christopher Columbus.
Seven years later, in 1937, the house was sold to Jacques Amsterdam, who called it "The Amsterdam Palace."
Versace bought the property for $2.9 million in 1992, in addition to the empty Revere Hotel next door. He spent $33 million on renovations.
The villa went on sale more than a year ago for $125 million but, in the absence of buyers, the asking price dropped to $75 million several months ago, before it landed on the auction block.