Sources tell TMZ Sports the undefeated 30-year-old British champion is all set to do battle with Canelo Alvarez on May 2nd at the T-Mobile Arena in Vegas (as first reported by ESPN's Salvador Rodriguez) ... and it's a fight Billy Joe has wanted for months!!

In fact, the reigning WBO super middleweight champion came into the TMZ office back in November to shoot an episode of "TMZ Sports: Roundtable" ... and told us why he's supremely confident he can beat the Mexican superstar.

"He's a real good fighter, he's done brilliant things for boxing," Saunders told us ... "I just think I've got the keys to his locker."

"If he beats me, I'll shake his hand and say you're the better man, but I know I'll beat him."

At the time, Saunders -- who was sitting with his promoter, Eddie Hearn -- said he doesn't care about the money, he's a competitor who wants to prove he's the best in the world.

"Let me win and keep the money," Saunders said ... "You let me win and keep the money. That's how much I want to beat him."

Canelo is one of the top fighters in all of combat sports and arguably the biggest draw -- coming off a spectacular violent KO of Russian stud Sergey Kovalev back in Nov.