The actor had dropped hints that he was ending his stint as Iron Man after second and third instalments as Marvel has no plans to make a fourth movie about the self-made superhero.
Joe and Anthony Russo, the brothers behind 'Captain America: The Winter Soldier', are directing the third Captain America.
Marvel and Downey Jr are yet to confirm the news but the Hollywood Reporter said they are in talks and the actor's return to the role could see him reap USD 40 million.
The three 'Iron Man' movies have earned USD 2.4 billion worldwide, while the first Avengers earned a record-breaking USD 1.5 billion worldwide in 2012.