Paulson will play the titular nurse, who was portrayed by Louise Fletcher in the film. Cynthia Nixon, Sharon Stone, Finn Wittrock, Jon Jon Briones, Charlie Carver, Judy Davis, Harriet Harris, Hunter Parrish, Amanda Plummer and Corey Stoll are set to co-star in the origin story.
Speaking to UPI before the American Heart Association's Go Red for Women fashion show in New York Thursday, Arquette said she is excited about joining Ratched, even though she doesn't know what character Murphy will have her play.
"He's surprising me. I don't even know what it is yet, but when Ryan Murphy says he wants to work with you, you just say, 'yes.' You trust him," the 59-year-old actress said, adding she has watched Cuckoo's Nest repeatedly over the years and regards it as a "masterpiece."
Arquette holds Murphy in high esteem, in part, because the American Horror Story co-creator has written complicated, fascinating roles for mature actresses such as Kathy Bates, Jessica Lange, Frances Conroy and Angela Bassett.
"So many people put older women out to pasture. He's brought everybody in. He's respectful," Arquette said. "He's a gift for women actors."
A vocal advocate for safety and equality, Arquette has said in the past that her public criticism about producer Harvey Weinstein's alleged abusive behavior cost her jobs.
Paulson said in her Ratched announcement that Arquette's courage in standing up for women was one of the reasons she wanted to work with her.
Arquette said conditions in Hollywood have been slowly improving over the past two years since more women are coming forward to discuss their negative experiences at the hands of powerful men, and the media, film studios and TV networks seem to be listening and taking action.
"There's an awareness and time's up -- that's the deal -- for this bad behavior that's permeated, well, the world," she said. "My focus has been on my own business and trying to make it a safe space and place for women and young boys and girls."
The actress said she and her acting siblings Patricia, David, Richmond and the late Alexis Arquette were raised by activist parents who taught them to fight injustice where they see it.
"It's just part of our being. You speak out. You tell the truth," Arquette said.
Walking in the fashion show last week was another way to help women -- namely reminding them to take care of their health, something the Baby It's You and The Executioner's Song actress said she tries to do for herself, as well.
"Stress is a killer. I am going to go to the heart doctor soon. I always do because I have always taken care of myself, but this last couple of years has been incredibly overwhelmingly stressful in a way that I had never experienced in my life before," she said.
"The next day after the [Brett] Kavanaugh hearings, I got shingles and that shingles virus is really bad. I had it. It's gone. It's good, but it showed me how stress is a killer. And how can I reduce the stress... It really was a big lesson for me. It was a wakeup call."