The ex-Transformers actress's role in the film is being kept secret, according to The Hollywood Reporter.
Cohen's film, which is to be directed by Borat's Larry Charles, will centre on the "heroic story of a dictator who risked his life to ensure that democracy would never come to the country he so lovingly oppressed".
Paramount Studios has said that the screenplay is based on the novel Zabibah and the King by Saddam Hussein.
Ben Kingsley and Anna Faris have already been confirmed for the comedy.
Megan Fox recently wrapped up Kissing Jessica Stein director Jennifer Westfeldt's new comedy Friends with Kids.
She has been attached to several projects since being dropped from the Transformers series by director Michael Bay.
Bay claimed that Fox's description of him as "Hitler" had prompted producer Steven Spielberg to call for her sacking from the franchise.