Organizers for the prime-time event said they hoped to model the debate on platforms used during the U.S. presidential contest, pitting Karzai against his former Finance Minister Ashraf Ghani and his former Foreign Minister Abdullah Abdullah.
Karzai faces criticism for his performance as president, with charges ranging from mounting security issues to government corruption.
His rivals, meanwhile, view it as an opportunity to advance their candidacy with just a few short weeks before the Aug. 20 vote, London's Guardian newspaper reports.
Ghani, who was once touted as a candidate for U.N. secretary-general, slammed the Karzai decision as "another broken promise," while Abdullah said Karzai "doesn't want to debate because he does not have a record to explain."
Polling figures from May show Karzai leading the pack by at least 20 percent over his closest rivals, but analysts in Afghanistan say that as the campaign season evolves, support for his rivals may push the election into a runoff.
The moderator for the debate, Mujahid Kakar, was the only Afghan journalist to cover the U.S. presidential contest in 2008.
Karzai, Ghani and Abdullah face a field of some 40 other challengers. More than 3,000 candidates are competing for provincial council seats.