Nesbitt is a Northern Irish actor best known for his work on TV's "Ballykissangel," "Cold Feet," "Murphy's Law" and "Jekyll & Hyde." His big-screen credits include "Bloody Sunday," "Waking Ned Devine," "Millions" and "Match Point."
The Hollywood Reporter said he will play a dwarf named Bofur in "The Hobbit."
"James's charm, warmth and wit are legendary as is his range as an actor in both comedic and dramatic roles. We feel very lucky to be able to welcome him as one of our cast," Jackson said in a statement.
Also joining the ensemble, as the dwarf Ori, is newcomer Adam Brown, the entertainment industry trade newspaper said.
"Adam is a wonderfully expressive actor and has a unique screen presence. I look forward to seeing him bring Ori to life," Jackson said.