No script yet exists, however it is reported that Bill Wittliff, writer of Legends of the Fall and The Perfect Storm, has been handed the script-writing reins.
Spielberg's production company Dreamworks will produce and Scorsese will direct the film, titled Into The Setting Sun, according to Hollywood trade paper Variety.
No script yet exists, however it is reported that Bill Wittliff, writer of Legends of the Fall and The Perfect Storm, has been handed the script-writing reins.
The story will focus on the birth and construction of the transcontinental railroad, which united the west and east of America in the 19th century.
The country was united at Promontory, Utah, on 10 May 1869, as the Union Pacific tracks joined those of the Central Pacific Railroad.
The construction of the 2,000-mile track cost the lives of thousands of workers, many of them immigrant Chinese.
The two American film-makers have never before collaborated although they have exchanged projects in the past.
Scorsese was originally slated to direct Schindler's List before Spielberg took on the project, and Cape Fear, one of Scorsese's films, was in development by Spielberg before he handed it over.
No timescale for the film has yet been announced.
Spielberg is currently in development with AI, a project he took over from the late Stanley Kubrick, to star Haley Joel Osment and Jude Law, while Scorsese is directing Gangs of New York, in Italy.
The collaboration brings together two of the biggest names in cinema, but also two of the most diverse.
Spielberg made his name as a director of box office epics such as ET and Jaws, although in recent years his style has turned more sombre with films such as Amistad.
By contrast, Scorsese has been feted by arthouse audiences, directing masterpieces such as Raging Bull and Goodfellas.