Two Seas Records, which is owned by Shaikh Abdulla bin Hamad Al Khalifa, son of Bahrain's king, said the album was scheduled for release late in 2007.
"I am incredibly excited about my new venture and I am enjoying being back in the studio making music," Jackson said in a statement released in London on behalf of the record label.
The label - which is due to release Jackson's long-promised Hurricane Katrina benefit single, I Have This Dream - said British music executive Guy Holmes had been named chief executive of the company and would oversee the making of the new album.
Holmes would also supervise "the management of Michael's other business interests", the statement added.
Jackson has been living in Bahrain since a California court acquitted him of child molestataion charges.
He rarely makes public appearances, but has been reported seen on several occasions in shopping malls in the Gulf disguised in a woman's abaya.
Since the end of his trial, Jackson has been plagued by financial problems.
Last month he shut down his massive Neverland Ranch in California, laying off most of the staff after agreeing to pay hundreds of thousands of dollars in back wages to avoid a lawsuit by state labour officials.