Other acts among the lineup of some 130 bands include Phoenix, Thievery Corporation, Tegan and Sara, Cat Power, New Order and Lana Del Rey. Vampire Weekend will play the Aug. 2-4 festival in Chicago just months after their upcoming album, "Modern Vampires of the City," is released in May. The Lumineers, coming off last year's hit "Hey Ho," will also perform.
Nine Inch Nails played the original Lollapalooza in 1991 and last played the festival in 2008.
Mumford and Sons rises to a headlining spot this year. In 2010 they played in the middle of the day. Their latest album, "Babel," has sold more than 1 million copies.
"They are going to make their victory lap at Lollapalooza this year," Farrell said.
The lineup includes Lollapalooza's well-known mix of indie bands, singer-songwriters and country, hip-hop, rock and electronic acts. Musicians come from across the U.S. and the world, including countries like Australia, Brazil, Chile, Greece and Sweden.
"We don't look to stylize our lineup so much as we just stay away from pop garbage," said Farrell, who in the past has said he sees himself as a music curator when arranging each festival lineup.
"Sometimes it's not what I'm going to do. It's what I'm not going to do that sets your trend," he said.
In recent years, headliners have included Lady Gaga, Green Day, Eminem and Coldplay. The full lineup is available on Lollapalooza's website.
The Bonnaroo Music and Arts Festival, the other major summer music festival in the U.S., has slotted Paul McCartney, Wilco and Tom Petty and the Heartbreakers as their headliners this year. Mumford and Sons are also playing Bonnaroo, to be held June 13-16 in Manchester, Tenn.
This year marks Lollapalooza's ninth anniversary in Chicago's lakefront Grant Park. Last year's festival sold out at 100,000 visitors a day, or 300,000 over the three-day event. Three-day passes priced at between $75 and $235 for this year are sold out. One-day passes are still available.