Cyrus, who recently turned 18, will play a female private investigator hired by the FBI to go undercover at a college sorority in the new film and Osbourne, 26, will play her roommate in the sorority.
The film is being directed by Tom Vaughan and the script has been written by Allan Loeb and Steven Pearl, according to Variety.
So Undercover will be produced by Guy East and Nigel Sinclair as well as writers Loeb and Pearl and Cyrus' mum Tish Cyrus.
Rob Cowan and Jodie Zuckerman-Weiner will executive-produce the film.
Osbourne has previously had small roles in movies such as the Austin Powers' film Goldmember and Devour.
She has also been involved in TV shows such as The Osbournes, Project Catwalk, Dancing With the Stars and Fashion Police.