After negotiations to take over the character of Sally Bowles, Stone, 25, will officially take over Williams' role at the end of November.
"Emma is replacing Michelle in Cabaret at the end of November," a well-placed source told RadarOnline.com.
"Producers are hoping it helps make them back their investment and stay open for another extension because Michelle didn't do the box office they were hoping for."
"There's going to be a massive campaign around Emma," the insider added.
The show is slated to play through at least Jan. 4, 2015, but with the addition of Stone bigwigs are anticipating it will go longer.
"The cast is contracted trough the end of March, though tickets are only on sale through January 4 currently," the source told RadarOnline.com.
"With the formal Emma announcement, they'll extend."