The director of the first two Iron Man movies will return as Stark's chauffeur and personal assistant Happy Hogan, Favreau's publicist confirmed to TheWrap.
In addition to ferrying Robert Downey Jr. around, Favreau will also executive produce the film.
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Black, who is taking over directing the film, wrote the screenplay as well. He is best known for writing "Lethal Weapon" and previously directed Downey Jr. in "Kiss Kiss Bang Bang."
Favreau most recently directed 2010's box office disappointment "Cowboys & Aliens," which at one point was supposed to star Downey Jr. in a role that later went to Daniel Craig. As an actor, he will next be seen in "People Like Us," a drama about a man who discovers he has a sister, which hits theaters on June 29.
In addition to Downey Jr. and Favreau, Gwyneth Paltrow and Don Cheadle will reprise their roles in "Iron Man 3" as Pepper Potts and James Rhodes, respectively. New additions to the cast include Ben Kingsley, who will menace Iron Man as the villainous The Mandarin.
The Hollywood Reporter first reported Favreau's involvement in "Iron Man 3."