Academy Award-winning actress Emma Thompson, who is penning the screenplay for the musical remake, told BBC news "I think Carey is set to play it, yes."
The role of Henry Higgins remains to be cast, but Thompson also said that Hugh Grant is a candidate. "I love Hugh so I'd love him to do it, he might want to, he might not want to, so we don't know yet. But hopefully we'll make it later this year."
Actress Keira Knightley had previously been reported to star in the film, but the deal was never finalized. "Shakespeare in Love" director John Madden has been in talks to helm the project.
Cameron Mackintosh and Duncan Kenworthy are producing the film that is aiming to shoot locations throughout London to give the film an authentic feel.
My Fair Lady is based on George Bernard Shaw's Pygmalion and features a book and lyrics by Alan Jay Lerner and music by Frederick Loewe. The original Broadway production opened on March 15, 1956, ran for over six years and won nine Tony Awards, including one for Best Musical. The score contains such Broadway classics as "I Could Have Danced All Night," "On the Street Where You Live," "Wouldn't It Be Loverly?" and "Get Me to the Church on Time."
The musical was adapted for the screen in 1963, directed by George Cukor, and cast Audrey Hepburn as Eliza and Rex Harrison as Higgins. The film won eight Academy Awards, including Best Picture, Best Director and Best Actor.