The film will be co-produced by Khan and Bhansali's production banners.
Bhansali is re-teaming with Khan after two decades as a lead in the film, which is described as a "love story".
Salman took to Twitter to share the news.
"It's been 20 years but I am glad Sanjay and I are finally back in his next film, 'Inshallah'. Looking forward to work with Alia and inshallah we will all be blessed on this journey. #Inshallah #SLB @aliaa08 @bhansali_produc @SKFilmsOfficial," the actor wrote.
It’s been 20 years but I am glad Sanjay and I are finally back in his next film, Inshallah. Looking forward to work… https://t.co/jXbQRjR3qB— Salman Khan (@BeingSalmanKhan) 1552973433000
Bhansali Productions also confirmed the announcement.
"Finally all speculations and wait end as 2019 brings together #SLB, @BeingSalmanKhan and @aliaa08 in his next film, #Inshallah. Wishing that this entire journey be filled with a lot of love and Inshallah, the team is blessed with hope and faith @SKFilmsOfficial @prerna982," the tweet from their official handle read.
Finally all speculations and wait end as 2019 brings together #SLB, @BeingSalmanKhan and @aliaa08 in his next film,… https://t.co/NcFoLuvocC— BhansaliProductions (@bhansali_produc) 1552974019000
The film also marks Bhatt's first collaboration with both Khan and Bhansali.
She said working with the actor-director duo is a dream come true for her.
"I was nine when I first walked into Sanjay Leela Bhansali's office, all nervous and hoping and praying that I would be in his next film. It's been a long wait.
"Dream with your eyes wide open they say and I did. Sanjay Sir and Salman Khan are magical together and I can't wait to join them on this beautiful journey called 'Inshallah'#SLB @BeingSalmanKhan @bhansali_produc @SKFilmsOfficial @prerna982," Bhatt tweeted.
Dream with your eyes wide open they say & I did. Sanjay Sir and Salman Khan are magical together & I can't wait to… https://t.co/C0hS5gHS4U— Alia Bhatt (@aliaa08) 1552973668000
The development came almost a month after Prerna Singh, CEO of Bhansali Productions, revealed Khan will star in Bhansali's next venture.
The filmmaker made his directorial debut with 1996's "Khamoshi - The Musical", which starred Khan. The actor went on to feature in the director-producer's classic "Hum Dil De Chuke Sanam" in 1999 opposite Aishwarya Rai Bachchan and Ajay Devgn.
Khan also made a cameo in Bhansali's "Saawariya", which launched Ranbir Kapoor and Sonam Kapoor.
On 53rd Birthday, Salman Khan Shakes A Leg With Sushmita Sen; Iulia Vantur & Katrina Kaif A...
Star-Studded Birthday Bash
Along with family father Salim Khan, mother Salma, brothers Sohail & Arbaaz, sisters Arpita & Alvira, the who's who of Bollywood like Katrina Kaif, Sushmita Sen, Iulia Vantur among others, attended the private party.
Here's a look the intimate birthday party.