The green ogre is moving out of his swamp and coming to London.
The show will transport visitors through a "live interactive adventure" featuring Shrek, Fiona, Puss in Boots and other characters from the popular DreamWorks franchise, the companies announced Monday morning.
"It's not like anything else, if you can imagine a theater-like experience where you the audience are part of the story," DreamWorks Animation Chief Executive Jeffrey Katzenberg said in an interview.
The Glendale studio will help produce the show and license its characters for the project, which will be financed and operated by Merlin, Katzenberg said.
Set to open in the summer of 2015, Shrek's Far Away Adventure will be next to Merlin's other leading attractions on the site: the landmark EDF Energy London Eye, the London Sea Life Aquarium and the London Dungeons. Merlin's brands also include Madame Tussauds wax museums and Legoland Discovery Centers.
It is the first of six Shrek attractions Merlin is developing over the next nine years in various cities around the world, the companies said.
"Developing an attraction based on Shrek and his friends is hugely exciting for Merlin Entertainments and the start of what we hope will be a wider collaboration with DreamWorks Animation," Chief Executive Nick Varney said in a statement.
For DreamWorks Animation, the partnership marks the latest move by the studio to promote its characters beyond the big screen. Last year, DreamWorks announced plans to license its characters for various theme parks being built in Russia.
The company also has licensed its characters for theme parks in Shanghai and the Meadowlands in New Jersey and has several live shows based on its "Madagascar" characters at Merlin parks in Britain, Germany and Italy.
DreamWorks also launched a Broadway show, "Shrek the Musical."
"This is just a continuation of what we have been working on in the last 18 months, which is a broad diversification of DreamWorks into a family entertainment company," Katzenberg said.
In addition to an interactive walk-through, the 6,500-square-foot Shrek attraction will include a courtyard where visitors will be able to meet Shrek, along with characters from other DreamWorks movies including