It will not be the first time Lahm has changed positions, having played on the left for Germany before and even switching positions halfway through matches at Euro 2008.
"The coach sees me in that position and I accept it. I have shown in other tournaments that I can play there," the Germany captain said on Thursday after announcing his coach's decision.
Loew said he had yet to decide whether to use Jerome Boateng on the right or youngster Lars Bender, a midfielder, as he draws up his plans to stop Portugal captain Cristiano Ronaldo.
"It is very good for us that Philipp will play on the left. There he is very valuable for us," Loew told reporters.
"On the right the first alternative is Jerome Boateng but Lars Bender has been very good in training in that position. I like him there."
"He (Bender) has a lot of potential and I have a very good feeling because I can always bring him on."
Germany's defence has looked far from secure in the past few months and conceded five goals in a 5-3 defeat by Switzerland in a friendly in late May but Loew said he was convinced his back line would hold up against the quick Portuguese.
"I am confident about my defence. We will be much more solid than in our game against Switzerland," added the 52-year-old.
Loew said he was unhappy with Boateng's late-night hotel appearance with a German model and friends in Berlin just hours before their departure for Poland but that his thoughts of a possible switch in defence were unrelated to that.
A German newspaper ran several pictures of Boateng meeting with his friends at the hotel.
"I did not like what happened on the weekend. I told him (Boateng) that and I told the team as well. Yes, it was his free time but it was Sunday to Monday. He must be in a position to give it everything he has got in this tournament," said Loew.
The three-times European champions also face Netherlands and Denmark in a tough group at the tournament being co-hosted by Poland and Ukraine.