The film is follow-up to Quentin Crisp's autobiographical drama 'The Naked Civil Servant', which was a huge success for ITV when it was first shown in 1975.
Nixon, who played Miranda in 'Sex and the City', will play performance artist and playwright Penny Arcade in the new drama alongside John Hurt, who is reprising his role as Crisp.
The real-life Arcade was a close friend of Crisp, with the cross-dressing writer once saying that she was the woman with whom he most identified.
A number of other American actors are also set to join the cast, including Denis O'Hare, who plays Rob Lowe's manager in US drama 'Brothers and Sisters' and will take on the role of magazine editor Phillip Steele.
Fellow US actor Jonathan Tucker will play a young artist who befriended Crisp, Patrick Angus, and Swoosie Kurtz, recently seen in the ITV1 drama 'Pushing Daisies', joins them as Crisp's US agent, Connie Clausen.
Executive producer James Burstall, of Leopardrama, the independent producer making the ITV1 drama, said: "Choosing to shoot the film in New York was a risky decision as the drama industry works very differently in the US from the UK.
"But the huge amount of strategic planning and the leap of faith are delivering a first-rate calibre of cast. There is a real buzz about the project in Manhattan as Quentin was a much-loved and notorious figure -- everyone has an anecdote to tell about him.
"And we've been touched by the number of friends and admirers of his (some of whom he never knew) who have wanted to help with the project in myriad different ways."
The ITV drama director Laura Mackie, added: "We are delighted to be making another film about Quentin Crisp, given 'The Naked Civil Servant' was such a landmark film for ITV.
"It's a real thrill and honour to be bringing an actor of John Hurt's stature back to the channel to reprise such an iconic role.
"This is largely down to the quality of Brian Fillis' wonderful script, which completely captures the extraordinary and outrageous character of Quentin Crisp."
Filming on An Englishman in New York began on Tuesday and the drama will air next year.