The "Cinderella" star will take on the role of Young Donna, a younger version of Meryl Streep's alter-ego Donna Sheridan in the 2008 musical, according to The Hollywood Reporter.
The highly-anticipated sequel is said to go back and forth in time to see how previous relationships have changed, but story details are yet to be revealed.
The first movie followed a bride-to-be Sophie (Amanda Seyfried) trying to find her real father so that he could walk her down the aisle on her big day, but she received a shock after discovering there were three potential men who could be her biological dad.
The movie will feature more ABBA songs that weren't included in the 2008 film.
Seyfried has been confirmed to return as Sophie. Pierce Brosnan recently confirmed he would be reprising his role as Sam Carmichael.
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