The Dark Knight Rises actor is to lead the cast of the untitled project, making it his second collaboration with Malick following 2005's The New World.
Bale and Malick almost reunited on the filmmaker's upcoming romance, once rumoured to be titled The Burial, but the actor was eventually replaced by Ben Affleck.
Malick's Bale-led film is said to be smaller in scale than his previous work, requiring a "pair of dominant leads, one male and one female", according to Twitch.
Rooney Mara (The Girl with the Dragon Tattoo), Haley Bennett (Kaboom), Clémence Poésy (Harry Potter) and Mia Wasikowska (Alice in Wonderland) are in the running to play the lead female role.
"Frankly, I'm still trying to understand what I was there to do and what I was meant to add in that context. Even Terry himself didn't manage to explain it to me clearly," Penn commented.
Alone in the Dark director Uwe Boll has called The Tree of Life a "piece of s**t", claiming that "Sean Penn is ridiculous in it".
Watch the trailer for Terrence Malick's The Tree of Life trailer below: