Bradley Cooper is to play Kyle in the movie, which was penned by Jason Hall.
Deadline.com said Spielberg couldn't reconcile his vision of the movie with the budget set by Warner Bros.
Spielberg's last film was the 2013 best picture contender "Lincoln."
Beyonce flaunts bikini body, Blue Ivy in vacation pics
Gal Gadot cast as Wonder Woman for 'Batman vs. Superman'