Producers at the Vereinigte Buehnen Wien (Vbw) company have acquired the rights to the black and white 1949 movie, which starred Welles as sinister racketeer Harry Lime in post-war Vienna, and they now plan to turn the British film noir into a German-language musical.
The Third Man: The Musical is expected to be developed, produced and premiered in Vienna in 2016 - and Vbw spokeswoman Katja Goebel admits producers are well-aware of the challenge they face to do the film justice.
She tells the Bbc, "We don't have to make a copy of the film - we have to make a great work for a new audience.
"For sure, there will be many fans of The Third Man who will come, but we will have to bring a new audience to the stage. That will be the great excitement, to make The Third Man live further, in another way."