It was widely rumored and speculated that Sam Raimi would be at the helm, but The Hollywood Reporter announces today that Guillermo del Toro ("Pan's Labyrinth," "Hellboy") will helm "The Hobbit" and its sequel for New Line Cinema and MGM. "Lord of the Rings" director Peter Jackson is exec producing the project.

J.R.R. Tolkien's "The Hobbit" has been in development hell for years but the rights to the project, along with Jackson's business disputes with New Line, have been resolved so that the project can move forward. The studios are also planning a sequel to "The Hobbit" that will bridge the film with the "Lord of the Rings" trilogy.

Production is expected to begin in 2009. Del Toro and Jackson are aiming to release "The Hobbit" in 2010 and its sequel in 2011. Both films will shoot back-to-back with a budget of $150 million each.

Because of the writers' strike, no writers have been hired yet but a script is expected once the strike ends. Del Toro and Jackson will oversee the writing of the screenplay.