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The $5 million feature, which co-stars "Austin Powers'" Seth Green, casts Culkin as Michael Alig, a real-life early-'90s Manhattan party promoter who, at one point, controlled his own record label and magazine.
As Alig's drug intake increased, his party themes became increasingly morbid and violent. His dark world spun out of control when he murdered his drug dealer by injecting Drano into his veins, and then dumped his body into New York's East River.
Variety said Alig openly boasted of the murder, and most of his followers thought it was a publicity stunt -- until the body washed ashore. The screenplay is based on the book "Disco Blood Bath," written by Alig contemporary James St. James, the role Green will take in the film.
The project is being written and directed by Fenton Bailey and Randy Barbato, the team responsible for the acclaimed documentary "The Eyes Of Tammy Faye." The pair previously produced a documentary on Alig, also called "Party Monster."
"They started following Michael Alig before he was Michael Alig, when he was a busboy at Danceteria," producer Christine Vachon told Variety.
The project will be Culkin's first screen role since 1994's "Richie Rich". In between, he took a well-reviewed turn on stage in London and New York productions of the play "Madame Melville."