Joey Mazzarino, a longtime writer on the show, is writing the script, while Shawn Levy and his 21 Laps production company, Michael Aguilar, Mark Gordon and Film 360's Guymon Casady are producing the picture.
The series premiered in 1969 and is a mix of live-action, animation and Jim Henson puppets such as Big Bird, Elmo, Oscar the Grouch, Cookie Monster and Bert and Ernie. The show has inspired two previous movies -- "Follow That Bird" in 1985 and "The Adventures of Elmo in Grouchland" in 1999.
The Hollywood Reporter said Fox had no comment on its story about a possible third installment in the big-screen "Sesame Street" franchise.
The entertainment industry trade newspaper did not say on which characters the new movie would focus or what the story might be.