The director, who helmed all three of the previous Transformers instalments, confirmed that the fourth film will pick up where Transformers: Dark of the Moon left off.
"We're basically taking from the history of where it was," Bay told The Huffington Post. "Or where we left it in Chicago. And we're going to carry it on from there."
He went on to admit that he had at one stage decided not to direct a fourth film, but became concerned that a new director would come into the franchise and "screw it up".
"I thought I was done," Bay said. "Then the ride came out [at Universal Studios Hollywood] and the two-and-a-half-hour lines. And then you're thinking, 'Oh my God, someone's going to take this over'. And you start doing a lot of soul-searching.
"The studio says they want to restart the franchise, And someone could come in here and screw it up, you know?
"I'm thinking that if I do this last one, we set it on a new footing, we change a lot of things - but we keep the history of the three in place. But we broaden it so it can be set up and be carried on - it would have a better chance for survival, I guess."
Hasbro president Brian Goldner recently revealed that the fourth film will introduce a new cast of robotic characters.
It was confirmed earlier this year that Transformers 4 will be Bay's last in the series.
Watch a trailer for Transformers: Dark of the Moon below: