New Line is in talks with Michael Bay, Brad Fuller and Andrew Form of Platinum Dunes to revamp the 1984 Wes Craven classic.
Englund, who played the razor-fingered child killer in eight movies in the horror franchise, said a new actor should reinterpret the role.
Speaking at the San Diego Comic Con, he said: "Well I doubt [I'll be in it] because I made Nightmare On Elm Street. That's me. This is a remake of the original and I'm sure they want to take advantage of the new special effects to exploit the dream landscape and that they would want to reinterpret everything. I would hope that they would.
"I would hope that Freddy doesn't look like me. I would hope that maybe he's wearing janitor's overalls and maybe he has an old baseball hat on instead of my fedora. Let a new actor reinterpret it. That's the fun of remaking it."
However, he added: "If they want to ask me to play the dream analysis expert, that would be fun."