The Times of India has reported that Kaif will play the lead role in Satsang, a behind-the-scenes look at the globalisation of Indian religion.
The model-turned-actress said: "It would be the most challenging part of my career so far."
The star won critical acclaim for her collaboration with Jha earlier in the year on the political drama Rajneeti.
"Prakashji and I have discussed the part in detail. I'm open to the challenge," added Kaif.
Filming is expected to begin on the project once the actor has completed work on Dostana 2.