The country music icon explained that the project will be based around her early life growing up in a small cabin in Tennessee with her 12 siblings.
Parton has admitted that she is not sure if it will be made for stage or screen, but the musical will also chronicle her successful recording career, her long partnership with fellow country star Porter Wagoner, her film work and her theme park Dollywood.
The star is quoted by The Sun as saying: "I've been writing it for a long time. I don't know if I'll do it as a movie, series, on stage - or some of all. I'm trying to feel it out."
The production would include some of Parton's biggest hits including 'Jolene' and 'Nine to Five', along with some specially written songs.
Parton first spoke of working on the musical towards the end of 2011 and insisted that she currently has no plans to star in the production herself.
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Watch Dolly Parton perform 'Baby I'm Burning' live below: