Earlier, it was reported that Rahul Rawail would direct the project.
But now a source close to the actor told IANS: "Sunny will be directing 'Ghayal Returns' and it will not be the continuation of the old story, but the character of Amit Mehra (from the original) will be taken forward."
The 57-year-old Sunny earlier said he has been trying to make the part two ever since the original came out.
The project is still in its scripting phase, the source said and added: "It's too early to talk about the plot of the film."
Sunny had directed the 1999 film "Dillagi", which also starred his brother Bobby.