Mr Tatum will join his 22 Jump Street co-star Jillian Bell for the remake of the 1984 film, which originally featured Tom Hanks and Daryl Hannah.
The original film followed the story of a young man (Allen) who reunites with a mermaid (Madison) who saved him from drowning as a boy. He ends up falling in love with her, not knowing who or what she is.
However, in the remake, Mr Tatum will play merman - a male version of the mermaid, and Ms Bell will play a female version of Allen.
The film is in the early stages of production.
Marja-Lewis Ryan is writing the script, while Ron Howard and Brian Grazer, who directed and produced the original film, will produce it along with Mr Tatum, Reid Carolin and Peter Kieran.
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