Sam Mendes (search) has signed on as director and is casting about for a book writer and songwriting team, theater sources told The Post.
DreamWorks would like to have Shrek, the Musical on the boards within three years, the sources added.
Shrek is just one of several properties DreamWorks is planning to develop for the stage, with Mendes as the studio's uber-artistic director. (DreamWorks is said to be looking for a bureaucrat to run a theater office in New York on a day-to-day basis.)
Also on the drawing board is Catch Me If You Can, DreamWorks co-founder Steven Spielberg's popular movie that starred Leonardo DiCaprio (search) as con artist Frank Abagnale Jr.
The stage version of that one is being written by Scott Wittman and Marc Shaiman, formerly of Hairspray fame, but now best known for their televised smooch at the Tonys.
"We're the gay Rosa Parks," Wittman noted yesterday from Amagansett, L.I., where the guys have hunkered down to work on Catch Me If You Can.
Shaiman and Wittman approached DreamWorks about turning the movie into a musical, and the studio has pretty much given them carte blanche.
"We're developing it ourselves, with Steven Spielberg's blessing," Wittman said.
They'll be working with Jack O'Brien, who directed Hairspray, and Jerry Mitchell, who choreographed it.
DreamWorks is the latest studio to move aggressively into the theater world.
The first and reigning champ was Disney, which, with Beauty and the Beast, The Lion King and Aida, dominates Broadway the way Cameron Mackintosh and Andrew Lloyd Webber did in the '80s.
Warner Bros. has also tossed its hat in the ring, and is working on a musical of Batman with composer Jim Steinman, undaunted by the fiasco that was Dance of the Vampires.
"Broadway is just another way for the studio to exploit its catalog," says a theater executive of DreamWorks' foray onto Broadway.
DreamWorks is not without theater experts.
One founder, David Geffen, co-produced Cats and Dreamgirls, and another, Jeffrey Katzenberg, while at Disney, oversaw Beauty and the Beast.
The choice of Mendes to head the theater division is an obvious one. He directed DreamWorks' Oscar-winning American Beauty and put London's Donmar Warehouse on the map, though his track record lately has been spotty, especially when it comes to developing new shows or movies.
His Road to Perdition, which he worked on from the start, was a critical and financial disappointment, and he directed the disastrous workshop of Wise Guys, the Stephen Sondheim musical that Hal Prince is trying to resurrect in Chicago this summer.