The actress will feature opposite the veteran star in Kochadaiyaan, to be directed by Rajinikanth's daughter Soundarya Rajinikanth.
"Yes, we are indeed in talks with Katrina and we will let you know soon," Soundarya told Mumbai Mirror.
A production source added: "It's true. We were very keen on Katrina. Two superstars together from the South and the North would create magic.
"We've been negotiating with her for some time. She is shooting for Yash Chopra, and has assured us of her dates in the next few months."
The project is described as an epic love story, with a soundtrack composed by AR Rahman.
"Rahman is bringing 130 musicians from Germany to record the background score," the source said.
Vidya Balan was earlier considered for the role of the female lead.