The 56-year-old actor is the first human actor to be cast in the upcoming puppet movie, which will be set in Europe, The Hollywood Reporter said.
Keeping the tradition in "Muppets" movies, the part of Interpol inspector will be a pivotal human role that will stand apart.
Other important human characters include a "Russian femme fatale" and "a male lead whose intentions are always in question."
The upcoming sequel will bring back James Bobin to the directing seat. Bobin will also co-write the script along with Nicholas Stoller after Jason Segel refused to return to the franchise despite the success of the first movie.
David Hoberman and Todd Lieberman are set to return as the producers.
"The Muppets" was released in the US theatres on November 23, 2011. The movie grossed USD 158 million worldwide, making it the highest-grossing "Muppets" film ever.
As for Waltz, he will soon be seen in Quentin Tarantino's "Django Unchained" and is also attached to star in Terry Gilliam's drama "The Zero Theorem".
