Queenstown-based Mr Clarke, who is internationally renowned for his landscape paintings, was inspired by his dachshund to paint a picture of a sad-looking dog in a human suit back in 2002.
This painting evolved into a series, which quickly gained popularity.
It did not take long before Hollywood came calling, with production companies interested in turning the elaborate world of Alveridge from Mr Clarke's paintings into a big-screen production.
The film rights were sold to Warner Bros in February 2009, and Mr Clarke said the film would be produced by award-winning screenwriter Akiva Goldsman.
Weta Workshop founder and five-times Oscar winner Richard Taylor is also on board, and has been creating bronze models and lifelike mannequins of the Lonely Dog and other inhabitants of Alveridge.
But Mr Clarke said the film could still be years away.
"Pre-production has started, but it is still at the concept stage.
"They are talking about live action with actors, but with digital replacement of the heads of the characters - a bit like in the film The Curious Case of Benjamin Button.
"But I am still not sure exactly how they will end up creating the movie version of this adults' fairy tale," he said.
Mr Clarke still makes four to six new paintings of his Alveridge characters every year, and said he got new ideas for the story all the time.
After spending years on developing the fictional world, which has also been portrayed in text through special edition books, he is not completely losing the creative control of his characters.
"At some stage one has to `hand the baby over' and let the story and characters evolve.
"But I will still be involved in the process through the role of executive producer," Mr Clarke said.
