The film will re-team Kidman with Stephen Daldry, who directed her to Oscar glory in “The Hours," The Hollywood Reporter said Monday.
David Hare, who wrote the screenplay for "The Hours," also penned the script for "The Reader."
Set in post-war Germany, the story is about a young man who begins a long, obsessive affair with a mysterious older woman who vanishes, only to reappear later as a defendant in a Nazi war crimes trial.
Shooting on the film is expected to begin next month in Germany.
Producing are Anthony Minghella, who directed Fiennes in his Oscar-nominated performance in the World War II epic, "The English Patient" and Kidman in the U.S. Civil War romance, "Cold Mountain;" as well as Sydney Pollack, who directed Kidman in the contemporary political thriller, "The Interpreter."
Minghella and Pollock previously collaborated on the 2006 drama, "Breaking and Entering."
Kidman can be seen now in “The Invasion,” while Fiennes’s "Harry Potter and the Order of the Phoenix" blockbuster is still in theaters.