The studio has picked up the movie rights to the long-running children's show featuring Jim Henson's puppet creations, which airs mostly on PBS stations in the US.
Real Steel director Shawn Levy and his 21 Laps banner will produce the picture, according to The Hollywood Reporter, although Fox did not comment on the news.
Sesame Street has been developed for the big screen twice before, with 1985's Follow That Bird and 1999's The Adventures of Elmo in Grouchland.
The programme was forced to issue a statement last summer denying that popular characters Bert and Ernie are gay, following an online campaign to get the friends to tie the knot.
Sesame Workshop - the non-profit organisation behind Sesame Street - insisted: "Even though they are identified as male characters and possess many human traits and characteristics (as most Sesame Street Muppets do), they remain puppets, and do not have a sexual orientation."
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Watch will.i.am guest starring on Sesame Street below: