Sand sculptors Remy and Paul Hoggard are using about 80 tonnes of sand to create the sculpture, which will depict King John at Runnymede in 1215.
The art work will stand 4m (13ft) tall and 9m (30ft) wide and is part of the anniversary event, Festival800.
Other events, celebrating democracy and freedom, are also taking place.
Mr Hoggard, who along with his Dutch wife has created sand sculptures all over the world, said this was one of his most adventurous projects in terms of size and scale.
The artist, who is originally from Beverley, East Yorkshire, but now lives on a farm in Bulgaria.
Magna Carta was a peace treaty between King John and the barons who were in revolt against him and it set out the principles of freedom under the law.
Only three of the 63 clauses in Magna Carta are still in law.
One defends the freedom and rights of the English Church, another relates to the privileges enjoyed by the City of London and the third is generally thought to have established the right to trial by jury.
One of the four surviving copies of Magna Carta is displayed at Lincoln Castle.
Festival 800 runs from 28 August to 6 September at venues across Lincoln and features performances from the likes of Billy Bragg and the Levellers.
There will also be comedy, poetry, street theatre, lectures and debate, organisers said.
Work is under way to create a giant sand sculpture in the grounds of Lincoln Castle to mark the 800th anniversary of Magna Carta.