James Cameron spoke with MTV about Avatar sequel plans:

Cameron made clear that the next film won't be a prequel, recounting previous backstory, but will begin after the events of the initial movie. "We'll follow Jake and Neytiri," he confirmed.

With Avatar's resounding box office success, the sequels are inevitable. And even better, Cameron promises they won't take nearly as long to make as the first Avatar:

"So now we have Jake, we have Neytiri. Sam can step right back into it, the characters will fit them like a glove, and we'll just go on. So a lot of the start-up torque that had to be done for one movie really makes more sense if you play it out across several films."