Rishi, who sent shivers down audiences' spine as ruthless Rauf Lala in "Agneepath", a remake of the 1990 film of the same name, has been cast as Yoginder Vasisht in SOTY.
"Such an honour to work with Rishi Kapoor... his versatility is unreal... Rauf lala to his portrayal of Dean Yoginder Vasisht in SOTY... genius, " Johar, 38, tweeted.
The film will see Karan returning to direction after two years - his last directorial venture was the 2010 release "My Name Is Khan".
Co-produced by Shah Rukh Khan, the film will have three new faces - Alia Bhatt (Mahesh Bhatt's daughter), Varun Dhawan (David Dhawan's son) and model-turned-actor Siddharth Malhotra in the lead roles.
The film is tentatively scheduled to release in August.