The 'Lost in Translation' director will co-write the screenplay with frequent collaborator Andrew Durham.
The coming-of-age story is set against the backdrop of San Francisco's cultural scene in the 1970s and '80s, before and after the AIDS epidemic - which would later claim the life of Abbott's father, reported Variety.
"I love the book 'Fairyland'; it's a sweet and unique love story of a girl and her dad, both growing up together in 1970's San Francisco. I think it will make an engaging and touching movie on a subject I've never seen before," Sofia said.