The director is closing a deal to return for his fourth film in the franchise after completion of Pain and Gain, reports Vulture.
An insider has said that Paramount are not far from closing a deal with Bay, using the leverage on his small-budget project to get him to commit to the Transformers sequel.
Bay has been developing Pain and Gain - a movie about the infamous body-builders-turned-kidnappers, the 'Sun Gym Gang' - since 1999.
The director had originally said that he would not return for the sequel, but has since been reported to be in talks alongside executive producer Steven Spielberg.
Shia LaBeouf will not be returning for the sequel. Jason Statham has also denied rumours that he has been offered the lead role in Transformers 4.
Watch Digital Spy's interview with Transformers: Dark of the Moon star Rosie Huntington-Whiteley and executive producer/director Michael Bay below: