Lohan, 24, has also signed on to appear in the film Mob Street, which comes from the same production company as Gotti.
"We're very pleased to have Lindsay on-board for both of these films," Gotti producer Marc Fiore said in a statement. "She has been very enthusiastic about the Gotti project, and after resuming discussions with her, we were impressed by her commitment to the film and felt she would be a perfect Kim Gotti."
Travolta will star as John Gotti Sr., while Joe Pesci will portray Gotti deputy Angelo Ruggiero. Production is expected to begin in New York in the fall, with the film set to hit theaters in late 2012.
Gotti will be Lohan's first role since she spent 23 days in jail for violating her probation and her first role since she spent three months at the Betty Ford Center. She last appeared in 2010's Machete, which she shot in 2009.
Lohan pled not guilty to felony grand theft earlier this year. A preliminary hearing is set for April 22.