The Messenger of Peace", to be shot around the holy cities of Mecca and Medina, was originally a 1977 Hollywood film made by Moustapha Akkad and starring Anthony Quinn.
It is often applauded by Muslims as an example of how commercial Western cinema can respect Islam.
Producer Oscar Zoghbi, who worked on the original, said: "We have only the utmost respect for Akkad's work but technology in cinema has advanced since the 1970s and this latest project will employ modern film techniques in its renewal of the first film's core messages."
Executive producer of the new movie, Hajja Subhia Abu Elheja, said: "Since 9/11, Islam's image has suffered tremendously.
"Now more than ever it has become important to bridge the gap of understanding between Muslims and non-Muslims."
"It is telling that only one great historical film has ever been made about Islam, a religion with 1.5 billion followers, whereas Christianity has been the subject of over 30."
The film's scriptwriter Ramsey Thomas, said: "In the 21st century there is a real need for a film that emotionally engages audiences on the journey that led to the birth of Islam."
In the original Message, Mohammed was not seen or heard. Instead Syrian-born director Akkad signified the Prophet's presence with light organ music and occasionally framed the film from the prophet's point of view.
Two versions of the film were shot - one in Arabic and one in English. The remake will be only the second English-language film of its kind ever made
This movie got oscar nominated and shows how islam started