Harald Zwart is directing the film, which will star Will Smith's son Jaden as the title character and start shooting early this summer in Beijing.
The original 1984 film and its two sequels were about the relationship between Daniel, a bullied teen played by Ralph Macchio, and Mr. Miyagi, the mentor who teaches Daniel how to take care of himself. The late Pat Morita played Miyagi in four films, including 1994's "The New Karate Kid," starring Hilary Swank.
Variety.com said that the "Kid" remake with Smith and Chan is set in an "exotic Asian locale" and borrows elements from the original film's plot.
Chan has starred in the "Rush Hour" trilogy, "The Forbidden Kingdom" and the upcoming "The Spy Next Door."
Smith was recently seen in "The Day the Earth Stood Still."
Zwart's directing credits include the soon-to-be-released "The Pink Panther 2."