The "Big Little Lies" and "The Undoing" collaborators will produce "Love and Death", which will feature "WandaVision" star Olsen as Montgomery, who is found guilty of murdering her neighbour and friend Betty Gore in 1980s Texas.
The limited series, written by Kelley and directed by "Homeland" 's Lesli Linka Glatter, will be developed for U.S. streaming service HBO Max.
"This is a gripping story about the frustrations and desires of two women in a small town that culminates in a terrible act of violence," HBO Max executive Sarah Aubrey shares in a statement.
"We are thrilled to be partnering with (producers) David, Lesli (Linka Glatter), Nicole and Per (Saari) and incredibly fortunate to have Elizabeth at the center of our story to bring out all the layers of Candy that make this story so unforgettable."
"Love and Death" will be based on the John Bloom and Jim Atkinson book "Evidence of Love: A True Story of Passion and Death in the Suburbs", as well as two articles they wrote for Texas Monthly, titled, "Love & Death in Silicon Prairie".
It's the second TV project to centre on the Montgomery case - "The Handmaid's Tale" star Elisabeth Moss will also portray the killer housewife on a separate series for bosses at UCP, a division of Universal Content Studios.