The "Sons of Anarchy" star will portray Villarreal in the film about the life and arrest of the first American to join the ranks of the Mexican cartel.
According to the Los Angeles Times, executives at Legendary Studios have acquired the rights to a Rolling Stone article about the drug boss, dubbed La Barbie, and they've picked Hunnam, 35, to play him.
The news comes amid a serious diversity crisis in Hollywood on the back of the lack of Oscar nominations for people of colour.
Hunnam's casting as La Barbie follows outrage surrounding Scottish star Gerard Butler's portrayal of an Egyptian in "Gods of Egypt", Welsh actor Christian Bale's role as "Moses in Exodus" and Emma Stone, who was cast as an Asian-Hawaiian woman in Cameron Crowe's film "Aloha".