The film is to be produced by British filmmaker Duncan Kenworthy and Broadway producer Sir Cameron Mackintosh.
The producers plan to use original songs from the Tony-award winning play, which first hit the stage in 1956 starring Julie Andrews.
"'My Fair Lady' is not just the quintessential stage musical and classic film, but a fantastic story," Columbia Pictures President Doug Belgrad said in a statement. "This update will preserve the magic of the musical while bringing 1912 London to life in an authentic and exciting way for contemporary audiences."
Filmmakers also hope to adapt more material from "Pygmalion," the play by George Bernard Shaw on which "My Fair Lady" is based. They say this will give the audience stronger emotional attachment to Eliza Doolittle as she undergoes the transformation from girl to lady.
The play was first adapted for the screen in 1963. It was directed by George Cukor and starred Audrey Hepburn as Eliza and Rex Harrison as Higgins. It won eight Oscars including Best Picture.
2Where possible, the film will be shot on location in the original London settings.
Kenworthy said in a statement, "With forty years of hindsight, we're confident that by setting these wonderful characters and brilliant songs in a more realistic context, we will honor both Shaw and Lerner as well as entertain contemporary audiences the world over.
Kenworthy and Mackintosh are in critical search for the perfect person to play Eliza. Sources say they are in discussion with a major international star to play the role.