The film is co-produced by Eros International and NextGen Films.
Radhika is excited about exploring the genre for the first time and said: "I absolutely love thrillers and horrors, so I'm very happy to be doing my first film in this genre. I am particularly excited about my collaboration with Eros, Next Gen and Pawan Kriplani on our project together."
Pawan, who directed Ragini MMS in 2011, will also direct Phobia. (Also Read: Radhika Apte: Varun Dhawan is Special to Me)
Producer Viki Rajani of NextGen Films, who has earlier produced R...Rajkumar and Table No. 21, said that the team has faith in Radhika's acting prowess.
"Radhika has proved her acting prowess time and again with her previous films. I am sure she will be able to deliver another enthralling performance in this genre, which is also a first for me. Pawan has earlier directed thrillers with expertise and the audience can look forward to a taut, edgy thriller," Mr Rajani said.