The film, based on the famed 1963 Sylvia Plath novel of the same name, follows main protagonist Esther Greenwood (Fanning) as she takes on an internship at a magazine in New York City before suffering from a mental breakdown when she returns home to Boston.
Notably, the literary work is the only novel published by Plath who committed suicide in 1963.
According to Deadline, production is set to start in the first quarter of 2017 alongside studio Priority Pictures who obtained film rights from Studio Canal. Dunst has also taken over scripting duties having co-written the screenplay with Nellie Kim.
The Bell Jar was originally adapted into a film in 1979 and was directed by Larry Peerce and starred Marilyn Hassett.
Dunst has dabbled in directing before, having recently helmed short films such as Welcome starring Winona Ryder and John Hawkes which was screened at Sundance, and Bastard starring Brian Geraghty and Lukas Haas which was featured at Tribeca and Cannes.
Fanning will next be seen in another actor's directorial debut, Ewan McGregor's American Pastoral, due in theaters Oct. 21.