According to the Hollywood Reporter the film will see Robin Williams reprise his role as struggling actor Daniel Hillard who takes on the alias of an elderly Scottish nanny called Euphegenia Doubtfire in order to see his children following his divorce.
Mrs Doubtfire 2 is said to be being written by David Berenbaum, the man behind Christmas favourite Elf, while Chris Columbus returns as the director.
Mrs Doubtfire star Mara Wilson lists reasons why child stars 'go crazy'
While no members of the cast have officially been confirmed, the original film also starred Sally Field as Daniel's ex-wife and Pierce Brosnan as her new love interest.
The acclaimed family film made $219 million in the US and $222 million internationally, earning Robin a Golden Globe for best actor and the film the same accolade for best musical / comedy.
This is not the first time Fox 2000 have tried to make a sequel to the box office hit.
In 2001 Robin's Jumanji co-star Bonnie Hunt was signed up to write a script although, according to the Hollywood Reporter, Robin, 62, and Chris, 55, weren't happy with the storylines.