Description about the film's premise told by co-director Pete Docter has some similarities with the Spanish fable's story.
Talks about Pixar Animation Studios' upcoming 2009 flick "Up" have begun to go into the surface now that words have it that the project could be a retelling of the classic Don Quixote fable by Spanish author Miguel de Cervantes Saavedra.
Speculations on this matter arose after similarities were found between the novel's story and co-director Pete Docter's remarks on the movie in an interview with Time. The magazine was noted to describe the flick as a "coming-of-old-age story" about a seventy-something guy who lives in a house that "looks like your grandparents' house smelled" then befriends a clueless young Wilderness Ranger and gets into lots of alter kocker altercations.
Though so, it is also possible that the film's premise only gets inspired by the fable rather than becomes a direct retelling of it. Since things regarding the subject are still unclear yet for now, this should thereby be considered with a grain of salt, but keep sticking to AceShowbiz for confirmation about the story.