Richard Linklater, who has directed "Slacker" and "Dazed and Confused," is attached to direct.
As a senior adviser to the second President Bush, Rove was among the most polarizing figures in the West Wing.
Producer Maya Browne told TheWrap on Tuesday that she is financing the movie through her Bratt Entertainment. Ginger Sledge also is producing.
The movie begins shooting in Austin, Texas, in late November.
Dano, who has played a fiery preacher in "There Will Be Blood" and a nihilist teen in "Little Miss Sunshine," would take a role that Shia LaBeouf had expressed interest in. Browne declined to comment on whether the actor will appear in the movie in another role.
Rove is considered "the architect" of President George W. Bush's election and political dirty tricks, including involvement in the Valerie Plame affair.
Browne said the film "is about when Karl Rove and Lee Atwater first met, which is when Karl Rove ran for president of the College Republicans, and that's when they sort of discovered dirty tricks. It's interesting to see them take that journey together."
Atwater went on to become chairman of the Republican National Committee and campaign manager for President George Herbert Walker Bush.
Rove (right, as a boy), reviled by the left, beloved by the right, worked on Richard Nixon's 1972 presidential campaign before advising George W. Bush, who nicknamed him "Turd Blossom."
Rove's other nickname: "Bush's Brain."
Dano is best known for his roles in "Little Miss Sunshine" and "There Will Be Blood." Linklater, a Texas native, also directed "Before Sunset" and "A Scanner Darkly."
Wes Jones wrote the script, which was on the 1010 Black List of best unproduced screenplays.
There's no distribution deal in place yet.