The This Means War helmer will develop the project based on a screenplay by Andrew Barrer and Gabe Ferrari, details of which are being kept under wraps, according to The Hollywood Reporter.
Magic Castle was turned into a private magic club in 1963, and regularly hosts performances from celebrity magic enthusiasts such as Neil Patrick Harris. Shows can be attended by invitation only and are not open to the public.
This is not the first landmark to inspire a Hollywood movie. Ben Stiller's Night at the Museum is based around the American Museum of Natural History, while Disney turned its Haunted Mansion theme park ride into an Eddie Murphy-fronted comedy.
McG will begin work on the movie after wrapping up Three Days to Kill, a Luc Besson-produced action thriller starring Kevin Costner.
The Magic Castle is yet to be assigned a release date.
Watch McG chat to Digital Spy below: