The Rubicon actor will play a villain named Savin opposite the film's star Robert Downey Jr, reports Deadline.
Last week, Rebecca Hall was in talks to replace Jessica Chastain in the picture as a scientist who helps create a new nanotechnology. Chastain dropped out of the role due to scheduling difficulties.
Iron Man 3 will once again star Gwyneth Paltrow and Don Cheadle, along with Guy Pearce, Sir Ben Kingsley and Andy Lau.
Scarlett Johansson is rumoured to reprise her role as Black Widow, who was introduced in the second Iron Man movie.
Both Johansson and Downey Jr can be seen in the blockbuster hit The Avengers as their respective superhero characters.
Watch a featurette video of Iron Man 2 below: