Giallo will feature his daughter Asia, along with US actor Vincent Gallo.
Ray Liotta is also in talks to star in the movie, which will begin shooting in the Italian city of Turin next month.
He is being lined up to play a detective chasing a serial killer (Gallo) who targets beautiful women, according to The Hollywood Reporter.
Giallo is the Italian word for yellow and is a slang term for thrillers.
Argento's best-known films include 1977's Suspiria and 1980's Inferno.