TVLine reports that the Oscar-winning actress will make her series television debut in the project from Glee's Ryan Murphy and Brad Falchuk.
She will play the interfering neighbour of Vivien Harmon (Connie Britton) and her sensitive husband Ben.
Lange previously won an Academy Award for her performance in 1982 film comedy Tootsie and a second for 1994's Blue Sky. She also starred in 1982 film drama Frances, 1985 Patsy Cline biopic Sweet Dreams and 2009 HBO film Grey Gardens.
Following Lange's casting, Murphy and Falchuk are believed to be rewriting their original script to expand her character into a third lead. The pair will executive produce the pilot alongside Dante Di Loreto, while Murphy will also direct.
True Blood star Denis O'Hare recently signed up to appear as a character named Larry, known as "the burn guy".
Production on American Horror story will begin later this month, with the potential series currently targeted for a fall launch.
> Glee execs to produce FX horror pilot