The film will be titled 'Shimla Mirchi' and will go on floors in August.
The romantic saga will also feature 'Citylights' star Rajkummar Rao. Actress opposite him is yet to be finalised.
"Ramesh Sippy's 'Sholay' was released 39 years back in 1975, when he created the character of Basanti with his favourite actress Hema Malini.
"Ramesh Sippy is going to work with Hema Malini after 'Sholay' in 'Shimla Mirchi' and like his other films, the first letter of his next film is also with the letter 'S'," a release said.