Gordon-Levitt confirmed the news on his Twitter feed, initially with a vague announcement saying that he was "honoured to be working with David Goyer, Warner Bros, and Neil Gaiman onSandman".
When an excitable internet leapt to immediate conclusions about what that might mean, however, he clarified that the starring and directing bit "remains to be seen"...
With a critically successful recent directorial debut in Don Jon, and a proven track record as a star at Warners via Inception and The Dark Knight Rises (not to mention Sony's Looper, which he also exec-produced), let's just say he's likely very strongly in contention.
Sandman, for those so far unfamiliar, was a 75-issue DC/Vertigo comics series published in the 1990s. Gaiman's own one-line synopsis was "The lord of dreams learns that one must change or die, and makes his decision," but there's obviously a lot more to it than that, with the sprawling series taking in pantheons and mythologies from across the globe, via threads about fantastical quests, serial killers, road trips, and short stories only tangentially connected to the core narrative.
A screen version has been in development hell for years, most recently in the form of a proposed television series to be overseen by Supernatural's Eric Kripke. This new cinema incarnation obviously puts the final kibosh on that, so it's intriguing to wonder how Goyer will compress and tame the material to movie length: even if, as seems likely, we're talking here about the first movie of an intended several.
There may already be a clue in those JG-L tweets though: note the "#Prelude". Preludes & Nocturnes is the first volume of the collected Sandman, detailing Morpheus' seventy-year imprisonment at the hands of a Crowley-like sorceror, which causes any number of ongoing sleep-related issues for a select few international mortals. Morpheus' escape from his long captivity is where the story starts. It makes sense if that's the chapter Goyer and Gordon-Levitt are currently working on.
Mostly speculation at this point then, but certainly more news to come, probably in the not-too-distant future. Will this be the Sandman that finally makes it to the screen? It suddenly seems very possible. Watch this space for developments.