Oren Peli, who steered the first movie to surprise box office success last year, announced Williams's involvement in the follow-up today.
He said: "I have some awesome news for the fans of Paranormal Activity. Director Kip Williams will join us for the next chapter of the story. We are thrilled to have Kip working with us.
"He is the guy we want at the helm, because he knows exactly what we want to deliver to the fans... and I can't wait to be a part of what he's putting together. I don't want to spoil the story but I promise it'll surprise you. Stay tuned."
Brian De Palma (Scarface), Brad Anderson (The Machinist) and Greg McLean (Wolf Creek) were previously rumoured for Paranormal Activity 2, which will be released in theatres on October 22.
Williams is the director of 1998's The Adventures Of Sebastian Cole and Jeff Bridges's 2004 film The Door In The Floor.