The film is being directed by Robert Rodriguez and Frank Miller and Green's casting ends a long search for the actress in the lead role of Ava Lord in the comic book adaptation, the Hollywood Reporter said.
The story, first written in 1990s, revolves around a photographer who falls back into the life of a beautiful woman (Green) who had left him years earlier for a wealthy man, only to see himself set up for the murder of her husband.
Josh Brolin is playing Dwight, the photographer.
"Ava Lord is one of the most deadly and fascinating residents of Sin City," Rodriguez and Miller said in a statement.
"From the start, we knew that the actor would need to be able to embody the multifaceted characteristics of this femme fatale and we found that in Eva Green."
Most of the original cast is returning for the sequel including Mickey Rourke, Jessica Alba, Bruce Willis, Rosario Dawson and Jaime King.
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New additions include Joseph Gordon-Levitt, Dennis Haysbert, Christopher Meloni, Jeremy Piven, Jamie Chung, Ray Liotta, Juno Temple and Julia Garner.
Green, was last seen playing a negative role in alongside Johnny Depp in Tim Burton's 'Dark Shadows'. Her next big screen outing is in Warners' 300 sequel '300: Rise of an Empire'.