The drama - part of a new range of original programming being produced by the online provider - is based on the 2011 book Orange Is the New Black: My Year in a Women's Prison by Piper Kerman.
The book tells the true story of Kerman, who was sentenced to 15 months in a notorious Connecticut prison after becoming involved in the drug trade.
Taylor Schilling (The Lucky One) will play the lead role in the Netflix adaptation, with Prepon now cast as her ex-girlfriend, drug runner Alex, according to TVLine.
The 32-year-old actress has appeared in episodes of How I Met Your Mother, Medium and Castle, and recently starred in short-lived NBC comedy Are You There, Chelsea?.
Jason Biggs (American Pie) will also star in Orange Is the New Black, which is being adapted for television by Weeds creator Jenji Kohan.
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Other original projects in various stages of production at Netflix include new episodes of cult comedy Arrested Development and the thriller House of Cards starring Kevin Spacey and directed by David Fincher.