The collection, including a draft of the 1963 I Have a Dream speech, will be sold in a single lot. Organisers say they hope it will go to a museum or university where scholars and the public will be able the items.
The June 30 sale is the latest attempt by the family of the murdered civil rights leader to sell the collection. In 1999 the US Library of Congress was close to buying it until the sale was blocked over concerns about the $20 million price.
Congress voted to authorise the money, but the sale fell apart in committee hearings as questions were raised over whether the decision would discourage future public donations to the library.
Sotheby's, which has valued the collection at $15 million to $30 million, tried to arrange a private sale to an institution in 2003, but there were no acceptable bids.
The sale follows the death of King’s widow, Coretta Scott King, in January but the family has not said why the papers are being sold now.
The King estate runs the King Centre in Atlanta, which includes his crypt and a museum. The centre has seen financial and management disputes among the King children.
Telegrams, suitcases and plane
tickets on display in New York
"The family has decided some time ago that they really did want to pass this on to other ownership, and there have been discussions with a number of institutions," said David Redden, Sotheby's vice chairman.
"I think since Mrs King's death, there is a bit of urgency."
The family has kept close guard on King's legacy, causing occasional controversy, such as when its lawyers challenged USA Today's right to print the text of King's famous I Have a Dream speech in 1994.
Among the more than 10,000 manuscripts and books in the collection are his Letter from Birmingham Jail, and a telegram inviting King to Lyndon Johnson's signing of the Voting Rights Act of 1965, one of the crowning achievements of the civil rights movement.
John Lewis, Democratic House member from George and a veteran of the civil rights movement, said he believed King would "be surprised that people are going to bid on papers and books for such a high price. He saw himself as an ordinary human being".