The film, to be produced by Fox Star Studios and Sangeeta Ahir of Mangal Murti Films, will see Arshad playing the role of Rangeela. Actor Amit Sadh will star as Guddu while Aditi Rao Hydari will play the role of Baby.
Kapoor will begin shooting the film next month with an aim to release the film in the first quarter of next year.
"Set in north India, 'Guddu Rangeela' is a story that will bring a smile on everyone's face. I am glad to once again partner with Fox Star Studios and together we hope to re-create the magic of 'Jolly LLB'. We have an excellent ensemble cast led by Arshad, Amit and Aditi. I am grateful to my producer Sangeeta Ahir for believing in the journey of 'Guddu and Rangeela'," Kapoor said in a statement.
"We believe in Subhash's vision and are looking forward to partnering once more, on what is going to be an exciting cinematic journey! We welcome Sangeeta Ahir on board as a producer and are hoping to set new benchmarks with Guddu Rangeela," said Vijay Singh, CEO Fox Star Studios.
'Guddu Rangeela' will be shot in Shimla, Ludhiana, Chandigarh and other locations in North India.