Whitaker will produce the project - made in association with Spirit Dance Entertainment and financed by Grosvenor Park - alongside Bobby Schwartz, Ross M Dinerstein, Tracee Stanley-Newell and Timothy Linh Bui.
The Collective's Shaun Redick and Jeff Golenberg and QED's Bill Block and Kimberly Fox are serving as executive producers and Redick is representing North American rights.
Bui wrote the screenplay and will direct from his own screenplay about a suicidal priest, a lonely mortician and an elderly ex-con whose lives collide on Christmas Eve.
Filming is set to begin in late July in Los Angeles.
Bui previously directed the Vietnam War-related dramas Three Seasons and Green Dragon.
'I have always been drawn to films that examine the human condition and our innate desire to live a more purposeful and fulfilled life,' Stanley-Newell said.
'Powder Blue is a hopeful and poignant film that ignites our desire to live life to its fullest; the story is universal. It is very exciting to be collaborating with Forest, Timothy and Eleven Eleven films on this beautiful film.'
'We are extremely excited about making a film that has a group of amazing actors that will translate an unbelievable script to the big screen,' Eleven Eleven's Bobby Schwartz added.
'Timothy Linh Bui will undoubtedly bring heart and soul to this passionate and powerful picture.'
Whitaker's upcoming films include The Great Debaters opposite Denzel Washington, Where the Wild Things Are for Spike Jonze, and Vantage Point opposite Dennis Quaid and Matthew Fox.
Biel appears in this summer's comedy release I Now Pronounce You Chuck And Larry, and the upcoming Oscar Wilde adaptation A Woman Of No Importance.