The untitled $18m (Euros 15m) comedy-drama will film all summer in Barcelona with Cruz speaking both Spanish and English in the film, which will be a co-production between Barcelona's Mediapro and Letty Aronson's Gravier Productions expected to star a mixed Spanish-American cast.
Far and away Spain's hottest star at the moment, Cruz has been tapped previously in international, English-language films shot in Spain. Most recently, she starred across Adrien Brody in bullfighter epic Manolete, now in post-production.
But her greatest critical acclaim - and an Oscar nomination as best actress this year - has been for the Spanish-language Volver from director Pedro Almodovar.
Almodovarhas since cited Cruz as the likely lead of what may be his next film, thriller La Piel Que Habito (literally, The Skin I Live In).
Fox News broke the story last week, citing Allen himself as the source.