Scott Gardenhour and Kira Madallo Sesay will produce the live-action pic.
Founded by Michael Bay and Gardenhour, The Institute is the commercial production house behind "Jumper" and "Pearl Harbor."
Madallo Sesay, meanwhile, is the founder of Kalliope Films.
"Hansel and Gretel" is scheduled to begin lensing in spring 2011 in Germany. Joseph C. Pepe, the lead character designer on "Avatar" will design the mythological characters.
Bay is currently shooting the third installment of "Transformers."
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