He will reteam with Paranormal Activity and Dark Skies producer Jason Blum on the film.
[Left: Original Town That Dreaded Sundown poster / Right: Ryan Murphy]
The pair previously collaborated on The Normal Heart.
American Horror Story's Alfonso Gomez-Rejon will direct the film, with Roberto Aguirre-Sacasa (Glee, Spider-Man: Turn Off the Dark) writing the script.
Charles B Pierce's original 1976 version of The Town That Dreaded Sundown centred around the real-life case of the Phantom Killer, who murdered five people in Texas and Arkansas in spring 1946.
The film featured documentary-style narration and featured various non-actor residents from the local area.
Aguirre-Sacasa has most recently worked on the script for Kimberly Peirce's Carrie remake.
Watch the trailer for the original The Town That Dreaded Sundown below: