Following earlier rumours, the Chinese actor has been confirmed to appear as new character Dr Wu, who has been created for Marvel Studios' 2013 film, reports Deadline.
The comic book movie is currently prepping for filming in China.
Hong Kong actor Andy Lau was previously in line to play an ally of Tony Stark's before backing out of the project.
Xueqi is a veteran of China's film industry, with a career spanning over 25 years.
He will join a cast including Robert Downey Jr, Gwyneth Paltrow, Don Cheadle, Jon Favreau, Ben Kingsley, Guy Pearce, James Badge Dale, Ashley Hamilton and Rebecca Hall in the Shane Black-directed movie.
Iron Man 3 will arrive in UK cinemas on April 26, 2013, following in the US on May 3, 2013.
Watch the film's first trailer below:
Photo gallery - Iron Man 3: