Tue Feb 11, 6:03 AM ET
By Justin Oppelaar

NEW YORK (Variety) - The pint-sized heroes of the "Spy Kids" movies will have to face down the Italian Stallion in the upcoming third installment of the hit franchise.

Sylvester Stallone has signed up to play the chief villain, called the Toymaker, in "Spy Kids 3-D: Game Over." The action hero's character is a longtime nemesis of the sleuthing Cortez family who traps the young heroine Carmen (Alexa Vega) in a warped virtual-reality game.

Vega, Antonio Banderas and Daryl Sabara will be returning to the third picture, as will helmer Robert Rodriguez.

Co-star Carla Gugino, who played Banderas' wife, Ingrid Cortez, in the first two pictures, is said to be in advanced negotiations to return for "3-D."

"I've always been a big fan of Sylvester Stallone," Rodriguez said. "His larger-than-life persona will be a great addition to the 'Spy Kids 3-D' universe."

Now lensing, "Spy Kids 3-D" is expected to hit theaters by July. The first two "Spy Kids" films are among the best-ever financial performers for Dimenision Films, posting a total domestic theatrical gross of more than $198 million.

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I'm excited that SLY will have the opportunity to work with ANTONIO BANDERAS [again] and ROBERT RODRIGUEZ. RODRIGUEZ is an excellent director and I hope that this is just the first time that SLY teams with him! [Special thanks to Ernest "Jazzman" Resendes for his artistic interpretation of SLY as the Toymaker.

- Craig Zablo