The Hollywood Reporter reveals that Don Cheadle will replace Terrence Howard in "Iron Man 2." Sources tell the trade that financially and creatively, an agreement couldn't be made between Marvel and Howard's camp.

Cheadle will be taking on the role of Tony Stark's best friend, Jim Rhodes, who eventually becomes the villain War Machine. The character of Rhodes will have a larger role in the sequel, which is currently being written by "Tropic Thunder" writer Justin Theroux.

Jon Favreau will return to the director's chair while Robert Downey Jr. and Gwyneth Paltrow are expected to be back as well. "Iron Man 2" is being prepped for a 2010 release date.