Set in 1937, the movie is about a high school student (Efron) who has a chance meeting with the actor-filmmaker just before he is about to become an enormous star.
Newcomer Christian McKay will play Welles, while Ben Chaplin has been cast as English film and stage actor George Coulouris, The Hollywood Reporter said.
The script was written by Holly Gent Palmo, who was a production coordinator on Linklater's film "Dazed and Confused," the trade paper said.
Efron is the star of the "High School Musical" movies and "Hairspray." He will soon be seen in "Seventeen."
Linklater has directed the films "A Scanner Darkly," "Fast Food Nation," "School of Rock" and "Before Sunset."