The untitled biopic will chronicle Presley's rise to stardom and his relationship with his manager, Col. Tom Parker, who will be portrayed by Tom Hanks.
Luhrmann (The Great Gatsby, Moulin Rouge) penned the script with Craig Pearce. Production will begin in early 2020 in Queensland, Australia.
"I knew I couldn't make this film if the casting wasn't absolutely right, and we searched thoroughly for an actor with the ability to evoke the singular natural movement and vocal qualities of this peerless star, but also the inner vulnerability of the artist," Luhrmann said in a statement.
Butler has appeared in The Carrie Diaries, Switched at Birth and Zoey 101. He stars in Once Upon a Time in Hollywood which arrives in theaters on July 26.