The West End performer explained that she has completed the first drafts of the project alongside Kylie Minogue's songwriting team of Steve Anderson and Terry Ronald.
"I'm writing a musical now - it's finished and we're workshopping it," she told The Sun.
"It is me, Terry and all of Team Kylie. Steve is doing the music and I'm going to perform in it.
"It's a Shirley Valentine-type story but that's as much as I can tell you."
Van Outen said that she has been inspired by working with Lord Andrew Lloyd Webber on Any Dream Will Do, as well as starring in his musical Tell Me on a Sunday.
She said: "It's a bit like Tell Me On A Sunday, which Andrew wrote in the '70s, but for our generation - for now.
"I have loved the writing side of it. The storyline is all mine but Terry is putting it together and putting pen to paper. I've just been developing it with him.
"I've had this idea for a long time and to do it we need to sit down and focus. If it was left to me, I've got a toddler and it wouldn't get done. He's been really brilliant helping me do it. But I won't be casting on TV - because I'll be in it."
The actress added that she does not have any issues with Lloyd Webber after she was dropped from the panel of Over the Rainbow.
"I don't hold grudges against people. But he did say I was going to do it then backtracked a little bit in Andrew fashion.
"Everyone who knows him knows he does it quite a lot and once you know that, you accept it."
Denise Van Outen recently played down reports linking her with a role in EastEnders.