The Dances with Wolves star will play a brutal individual known as Ace Woody in director Quentin Tarantino's forthcoming western, Deadline reports.
Costner's character is described as "sadistic", working as a trainer of male fighting slaves and female prostitutes on Leonardo DiCaprio's character's plantation.
Django Unchained stars Jamie Foxx in the eponymous role, as well as Inglourious Basterds' Christoph Waltz and Samuel L. Jackson.
The film centres on Foxx's character, a rogue slave who sets out to rescue his wife from DiCaprio's Calvin Candie.
Costner's next project is Zack Snyder's Man of Steel, which is expected to begin filming in the near future.
Django Unchained is scheduled to open in theaters on Christmas Day 2012.