Murphy, 47, star of Beverly Hills Cop and The Nutty Professor, has reportedly been signed up by British director Christopher Nolan for the Dark Knight sequel.
The role, played by Jim Carrey in 1995's Batman Forever, had been linked to Pirates of the Caribbean actor Johnny Depp.
Actress Rachel Weisz is also being tipped to play Catwoman, a role linked previously to Angelina Jolie.
Movie executives have also allegedly signed up Transformers and Indiana Jones actor Shia LaBeouf to play Robin, although Nolan has previously stated he would not want Batman's sidekick in any of his adaptations.
Nolan has so far given no outright indication that he will continue directing the franchise, successfully relaunched with Christian Bale as the Caped Crusader.
But the third movie, following Batman Begins and The Dark Knight, is reportedly being developed under the working title Gotham, and is set for a 2010 release.
A film insider told The Sun: "Chris wasn't sure if he wanted to do another movie but as soon as he decided to, he got the wheels in motion.
"Eddie's a fantastic addition. Everyone's excited to see what he does as the Riddler."
Heath Ledger, who played The Joker in The Dark Knight and died in January, aged 28, last week won a Golden Globe nomination for his scene-stealing performance. He is also tipped to receive a posthumous Oscar.
- telegraph.co.uk
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