Lossiemouth will bid for her fourth Cheltenham Festival victory next week (Pic: Healy Racing)
Connections have also decided to apply cheekpieces for the first time, and Lossiemouth arrived at Cheltenham on Saturday evening.
The seven-year-old also had the option to bid for a hat-trick in the the Close Brothers Mares' Hurdle, but had attracted significant support for the Unibet Champion Hurdle in recent days.
Following a discussion on Saturday evening, Mullins and owner Rich Ricci decided it was time to run their star mare in the two-mile showpiece.
Lossiemouth is now a best-priced 11-4 to win the feature on day one of the Cheltenham Festival, with The New Lion heading the market at a general 15-8.
Mullins told Sporting Life: "Rich and I have been in dialogue on her target and after we spoke after racing at Gowran it has been decided that Lossiemouth will run in the Champion Hurdle.
"With the declaration timing she was always going to travel over to England when she has and we're happy to let her take her chance on Tuesday where she'll wear cheekpieces."
Sponsors odds - Unibet Champion Hurdle: 15-8 The New Lion, 9-4 Lossiemouth, 9-2 Brighterdaysahead, 15-2 Golden Ace, 14-1 Poniros, 18-1 Tutti Quanti, 18-1 Anzadam, 20-1 Alexei and 66-1 Workahead.
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