Schwarzenegger, 66, had worked with director James Cameron and delivered hits like "Terminator", "Terminator 2" and "True Lies", reported Digital Spy.
The original "Avatar" shied away from big-name actors, with Sigourney Weaver as the most high-profile casting in the movie.
"Avatar 2", "Avatar 3" and the prequel "Avatar 4" will be shot simultaneously in 2014.
Schwarzenegger is also in talks to return to the Terminator franchise with the upcoming "Terminator 5". He will also be seen in "The Expendables 3" and "Escape Plan".
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