An activist and politician, Milk was the first openly gay man elected to public office in the United States.
In 1977, he was voted to the city supervisors' board of San Francisco.
The following year, he and the mayor were shot to death by another city supervisor, Dan White.
Co-financed by Focus and Groundswell Productions, "Milk" will be the first non-documentary feature to explore the man's life and career.
Penn has starred in the films "Mystic River" and "21 Grams," while Van Sant has helmed "My Own Private Idaho" and "To Die For."
"Gus Van Sant is the perfect artist to bring to the screen the extraordinary story of Harvey Milk," Focus CEO James Schamus said in a statement.
Groundswell CEO Michael London added: "The Focus team is the best in the business when it comes to provocative, socially relevant movies with world-class talent like Gus Van Sant and Sean Penn. We're thrilled that they share our passion for telling the story of Harvey Milk."
Production is set to begin in January.