The actor played the role in the original Lord of the Rings trilogy, while Martin Freeman will play the younger version of the character in the new films.
Earlier this month, Jackson released the first video blog on the set of The Hobbit, taking cameras through sets and production offices. At the end of the video, a voice is heard reading a script which many fans believed to be the voice of Holm.
However, the director revealed on his Facebook page that the voice actually belonged to Freeman.
He explained: "One comment that came up from the recent video blog was the Bilbo voice at the end - many of you assumed it was Sir Ian Holm. While Ian will be returning as the older Bilbo Baggins in The Hobbit, that recording was actually Martin Freeman's voice, taken from a script read-through we recorded when the cast first arrived. I have to admit, I wasn't sure who it was when I first heard it either."
The Hobbit began production in New Zealand in March.
Watch the video below to see the first Hobbit video blog with director Peter Jackson, Martin Freeman, Sir Ian McKellen and more: