Naomi Watts joins Daniel Craig movie

Jim Sheridan's 'Dream House' set up at Morgan Creek

Naomi Watts will star opposite Daniel Craig in "Dream House," a thriller Jim Sheridan is directing for Morgan Creek. Universal is distributing in North America.

The project, picked up as a spec by David Loucka, follows a family that relocates into what appears to be the ideal residence in small town Connecticut. However, a father (Craig) and his family are disturbed to discover that their beautiful new home was the site of another family's slaughter, believed to be at the hands of the husband who survived. Watts plays the family's neighbor.

Morgan Creek fully finances its movies, which are distributed by Universal.

The company's James G. Robinson is producing with David Robinson, Daniel Bobker and Ehren Kruger.

Production is slated to begin February in Toronto.

Watts is at Sundance this week for her ensemble drama "Mother and Child," directed by Rodrigo Garcia. The actress, repped by CAA and Untitled, portrays Valerie Plame in Participant Media's "Fair Game."