Dubbed the Blackphone, the project is a joint venture between Silent Circle in Maryland -- which closed down its own encrypted email service last summer to avoid having to comply with government requests to provide data -- and Spanish smartphone startup Geeksphone, TechCrunch reported.
The companies announced a new Switzerland-based joint venture to collaborate on technology projects, with Blackphone as their first offering.
In addition to encrypted communications, the Blackphone will feature private browsing and secure file-sharing.
"I have spent my whole career working towards the launch of secure telephony products," said Phil Zimmerman, the creator of the Pretty Good Privacy encryption standard and one of the founders of Silent Circle. "Blackphone provides users with everything they need to ensure privacy and control of their communications, along with all the other high-end smartphone features they have come to expect."
The phone is being developed with a "security-oriented" version of Android called PrivatOS.
Blackphone is due to be previewed at the Mobile World Congress in Barcelona, Spain, next month.