The first sequel is planned for release in four years, with the second a year later. Cameron will decide whether to shoot the films back to back.
He says the second and third films will be self contained stories, exploring the themes of the original.
"I'm looking forward to returning to Pandora, a world where our imaginations can run wild," said Cameron.
"Avatar" is the biggest modern blockbuster, making more than $2.5 billion at the box office worldwide.
"Avatar" follows the adventures of a man in alien form (Sam Worthington) who falls for a 10-foot, blue-skinned native (Zoe Saldana) of the distant moon Pandora, where greedy humans wage war over the land's natural resources.
The Associated Press contributed to this report.