Celtic will meet FC Copenhagen in the last 32 of the Europa League, while Rangers take on SC Braga.
The knockout ties are scheduled for 20 and 27 February, with Celtic at home in the second leg and Rangers beginning at Ibrox.
Portuguese side Braga finished ahead of Wolves in their group. Copenhagen were runners-up to Malmo.
Copenhagen are second in the Danish Superliga and Braga currently sit ninth in the Primeira Liga.
Celtic, two points in front of Rangers in the Scottish Premiership, were seeded after topping a group including Cluj, Lazio and Rennes.
Steven Gerrard's side, like their Glasgow rivals, lost just one group match as they finished behind Porto.
Rangers have never played Braga before, while Celtic and FC Copenhagen were Champions League group opponents in 2006, with current manager Neil Lennon playing in a 1-0 home win and a 3-1 loss in the Danish capital.
Celtic have been eliminated at this stage of the tournament in the past two seasons. Rangers will be playing European football beyond Christmas for the first time since 2010-11.
Last-32 Europa League draw in full:
Wolves v Espanyol
Sporting Lisbon v Istanbul Basaksehir
Getafe v Ajax
Bayer Leverkusen v Porto
Copenhagen v Celtic
APOEL v Basel
Cluj v Sevilla
Olympiakos v Arsenal
AZ Alkmaar v LASK
Club Bruges v Manchester United
Ludogorets Razgrad v Inter Milan
Eintracht Frankfurt v Red Bull Salzburg
Shakhtar Donetsk v Benfica
Wolfsburg v Malmo
Roma v Ghent
Rangers v Braga