Martin Freeman, who is Cumberbatch's Sherlock co-star and will play Bilbo Baggins in The Hobbit, first revealed the actor's involvement in Peter Jackson's fantasy movies at last month's BAFTA Awards.
Cumberbatch will portray Smaug, the main antagonist in JRR Tolkien's story, through motion-capture technology, reports Deadline.
The 34-year-old has high-profile movie roles coming up in Steven Spielberg's War Horse and spy drama Tinker, Tailor, Soldier, Spy.
The Hobbit movies will be divided into two parts and released under the titles An Unexpected Journey (on December 14, 2012) and There and Back Again (December 13, 2013).
Sir Ian McKellen, Cate Blanchett, Orlando Bloom, Sir Ian Holm, Sir Christopher Lee, Hugo Weaving, Elijah Wood and Andy Serkis will reprise their roles from the Lord of the Rings trilogy, while cast newcomers include Richard Armitage, Stephen Fry, Sylvester McCoy, Bret McKenzie, James Nesbitt, Lee Pace, Aidan Turner and Luke Evans.