Shooting starts in early May in Scotland and New Zealand, says Variety.
The picture tells the story of a lonely boy in Scotland (Etel) who finds a mysterious egg on the shore of a lake. When the egg hatches, what emerges is a "water horse," a mythical sea monster of Scottish legend.
The Ecosse Films production is being produced by Robert Bernstein, Douglas Rae, Barrie Osborne and Charlie Lyons.
Special effects for The Water Horse will be done by Weta Digital and Weta Workshop. Shingles most recently were responsible for visuals in Peter Jackson's King Kong. Walden and Weta also teamed on the holiday hit The Chronicles of Narnia: The Lion, The Witch and The Wardrobe.