According to reports, `Whiplash` writer-director Damien Chazelle is in talks with the pair for his upcoming musical.
`La La Land` will centre around aspiring and lonely actress Mia (Watson) and cocky, charismatic jazz pianist Sebastian, who fall for each other in Los Angeles.
The pair soon discover the challenge of staying together in the cut-throat climate of the entertainment industry.
Teller, who starred in Chazelle`s `Whiplash`, will be seen as Mr Fantastic in John Trank`s `Fantastic Four` reboot and `Divergent` sequel `Insurgent`.
Watson was most recently seen in Darren Aronofsky`s `Noah` and will next appear alongside Ethan Hawke in `Regression`.