Based on the rise of the controversial group, the film is set in the post-Civil War period, said The Hollywood Reporter.
Amazon has acquired feature film rights to the drama "K Troop".
The film will chronicle the rise of the KKK in the American South in 1865 and the man who led the US Army's elite K Troop that stomped out the group in 1871.
The organisation later rose again in 1915 and flourished nationwide in the early and mid-1920s.
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"K Troop" is based on an upcoming Slate article by Matthew Pearl. Gordon-Levitt will produce through his hitRECord Films banner. The project is currently in search of a writer.
Gordon-Levitt, 35, is developing the project with an eye to star as Major Lewis Merrill, the leader of the division.
An enigmatic man and brilliant military strategist, Merrill built an spawling network of informants, including a number of local African-Americans, who risked their lives to piece together the secretive workings of the KKK.