Arnold Schwarzenegger has been rumoured to play the villain in James Cameron's Avatar 2.

The action man could be set for a reunion with the Oscar-winning filmmaker, following their previous collaborations on Terminator, Terminator 2 and True Lies.

The 66-year-old Austrian actor is being tipped to portray a "bad guy human general" in the sequel, sources have told the Los Angeles Times' Latino Review blog.

Stephen Lang's character - Colonel Miles Quaritch - was the main human threat in the first film, and it is thought that Arnie's rumoured alter-ego could escalate the intimidation on the big screen.

Sam Worthington and Zoe Saldana are expected to return for Avatar 2, which is scheduled for a release in December 2016. The three upcoming Avatar movies are to be filmed at the same time, with production set to get under way in 2014.

"Jim is still writing and hopefully by early next year, we will be shooting it," the actress has said.

Avatar, which has two planned sequels and a spin-off book series, is the highest-grossing movie of all time, having amassed nearly 2.8 billion US dollars worldwide.