Savannah's department of Tourism and Film Services said Redford plans to direct the movie "The Conspirator" this fall in Georgia's oldest city.
Jay Self, the city department's director, said Savannah can expect an economic impact worth millions of dollars.
"We are very excited about the positive impact this project will have on our community," Self said. "The wide exposure such projects bring can pay dividends for years."
A production of The American Film Company, the movie tells the story of boarding house owner Mary Surratt, who was hanged in 1865 after being convicted of aiding Lincoln's assassin, John Wilkes Booth.
Redford's no stranger to Savannah. He directed "The Legend of Bagger Vance," starring Will Smith, on the Georgia coast in 1999.
A number of filmmakers have chosen Savannah's historic homes and oak-shaded squares for movie backdrops. Movies filmed here include "Forrest Gump," ''Glory," ''The General's Daughter" and "Midnight in the Garden of Good and Evil."
Last month, 16-year-old superstar Miley Cyrus finished work on Walt Disney Pictures' "The Last Song," the latest film production to land in Savannah.