Variety reports that Boyle will direct the film with production to begin next year for a late 2010 release.
127 Hours is financed and distributed by Searchlight in partnership with Pathe.
Boyle has written a treatment, and Simon Beaufoy is in talks to write the script. Christian Colson will produce, representing a reunion of the creative team and the financiers behind Oscar winner Slumdog Millionaire.
In the true story of the mountaineer, Ralston's right forearm got pinned for nearly five days under a boulder during a climb in Utah in 2003. He used a dull knife to amputate the limb, then scaled a 65-foot sheer wall and hiked out before running into a family that gave him water and food. He was finally rescued by helicopter.