The two old foes, now good friends, will clash Friday in an 18-hole head-to-head, dubbed "The Match," at Shadow Creek in Las Vegas, Nevada.
And the pair, who have 19 majors between them, have already upped the ante by wagering a separate $200,000 out of their own pockets -- to benefit each other's chosen charities -- on whether Mickelson will birdie the first hole.
"The tough thing was getting him to bite," said Mickelson, who first proposed a $100,000 bet, talking to CNN World Sport's Hines Ward in Las Vegas.
"Not only did he take it, he doubled it. He doubled it, are you kidding me? That's awesome. I can't believe it."
Woods, who won the PGA Tour's season-ending Tour Championship in September for his first victory in five years, said the challenges would be "escalating."
"We're trying to get in each other's heads," added the 42-year-old.
'Bragging rights'
Former world No.1 Woods has always had the upper hand over his compatriot throughout their illustrious careers, and had won eight of his 14 majors before Mickelson clinched his first in 2004.
Woods has 80 PGA Tour wins -- the second highest of all time -- to Mickelson's 43, and is widely expected to prevail at Shadow Creek after his remarkable return to form.
An impressive comeback season culminated in the Tour Championship win following a fourth major back surgery in April 2017.
Mickelson staged a renaissance of his own this year with a first win since his British Open triumph in 2013, and is adamant he can take down his former nemesis.
"The bragging rights that will go on for months and years after this will be just as valuable [as money]," said Mickelson. "Because if I'm able to come out on top I am the worst guy to lose to. I'll find a way to make sure you never forget."
"He's that guy," said Woods.
"That makes me a fun guy to beat," fired back Mickelson.
'Smack talk'
The two players will wear microphones for the match, meaning those stumping up the $19.99 to watch on pay-per-view in the US will be able to hear their interactions on the course.
"You know Tiger is an underrated smack talker," said Mickelson, 48. "He doesn't get the credit for his smack talk because he does it so understated and he does it under his breath so nobody else can hear other than you.
"That funny side of him is going to come out."
The pair were known to have a frosty relationship in their competitive heyday, but involvement in the US Ryder Cup task force, Presidents Cups and Mickelson's support through Woods' injuries have bonded them in recent years.
At a news conference in Las Vegas to promote "The Match," they stood face to face like boxers before a prize fight but dissolved into giggles seconds later.
With both players having tasted success again this year, Mickelson predicted a "phenomenal" 2019. When asked who will win the next major between them, the left hander pointed to the next major on the calendar, the Masters in April.
"It's at Augusta, we've both had success there," he laughed.
Woods, a four-time Masters champion, added: "I mean, there's seven coats [green jackets] between us.
"But I have more."
"You see the subtlety?" said Mickelson. "He pays a compliment and then he throws a dig."
If he wins, Mickelson is already planning a repeat of his "worm" dance routine that lit up social media earlier this season in an advert for his clothing sponsor.
"It's very possible that I might do the worm across the green," he said. "I'm not sure how it's all going to play out because I don't want to rub it in too early but that could come out."
Woods said he was safe given Mickelson vowed only to perform it if he wins, but he admits he is under "pressure" to come out on top to avoid seeing the worm.
"How he responds to that pressure. That's the real question," said Mickelson.
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