Produced by Aditya Productions, the movie is believed to be India's highest budget movie at an estimated cost of $30 million.
Shooting will begin in the Holy Land in October under the direction of veteran Bollywood film-maker Singeetham Srinivasa Rao.
The film will depict the story of Jesus Christ from his birth until his death and resurrection and will be released in English and three Indian languages in 2011.
The producer of the movie, Konda Krishnam Raju, told media it was the first time in the 79-year history of the Bollywood film industry that a movie on Jesus Christ was being made.
The film will include seven devotional songs and make-up artist Christien Tinsley, who was nominated for an Academy Award for his work on The Passion of the Christ, has been hired to work on the make-up effects.
South Indian star Pawan Kalyan will narrate the Telugu and Malayalam versions. Film makers are still to disclose the cast of the Hindi and English versions.
"There are millions of people in India who follow Christianity. It is a great faith. There is a great audience for such a film," said Kalyan.
The producers have been granted special permission to film in Bethlehem and also Jericho.
Director Rao told reporters that he hoped the film would spread "the message of love and peace" around the world.