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Don Cheadle will replace Terrence Howard in Marvel Studios' Iron Man 2.
According to The Hollywood Reporter Magazine in the US, sources close to the deal said negotiations with Terrence fell through.
Apparently the actor and the studio disagreed on financial differences, among other things.
In the first film, Terrence played Col. James 'Rhodey' Rhodes - Tony Stark/Iron Man's best friend and future armour-clad hero War Machine.
Iron Man 2 will hit cinemas on May 7 2010.
Jon Favreau is returning as director, and Robert Downey Jr. is expected back as Stark/Iron Man.
Gwyneth Paltrow also is expected to be back as Pepper Potts.