The horror film is being written and directed by Eli Morgan Gesner, the professional skateboarder turned clothing designer, said the Hollywood Reporter.
Penn, who at 22 has a thriving modeling career with shoots for GQ, Elle and the Gap, will play the lead role as the youngest member of a group of kids who live in a condemned, filthy squat on Manhattan's Lower East Side.
After an infection originating from their own waste hits the building's residents, the people inside lose their minds and go on murderous rampages.
He was also a consultant on and inspiration for HBO's 'How to Make It in America' and is involved in New York's art scene.