Slaughterhouse Rulez is set in an elite boarding school "where boys are girls are groomed for power and greatness."
Deadline reports Pegg and Frost will act as Executive Producers on the project, but it is not currently clear from reports as to whether they'll star in the film as well.
The Spaced actors have set up Stolen Picture, a new production company through which to produce TV and film projects. Deadline says: "The company will aim to produce a variety of scripted entertainment in line with Pegg and Frost's unique brand."
Talking about Slaughterhouse Rulez, the producers explain: "The story's hero, Don Wallace, is a wide-eyed new boy from a modest background forced to navigate a baffling new world of arcane rules and rituals, presided by sadistic sixth formers. Matters of status are aggressively enforced and conversation with school goddess Clemsie, are strictly forbidden.
"But this ancient and ordered world is about to be shaken to its foundations - literally - and when a controversial frack site on prize school woodland causes seismic tremors, a mysterious sinkhole and an unspeakable horror is unleashed. Soon a new pecking order will be established as pupils, teachers and the school matron become locked in a bloody battle for survival."