"I was with Anne Hathaway a couple weeks ago, it looks like we want to do Princess Diaries 3 in Manhattan," Marshall explained Monday to People magazine.
"Anne Hathaway is very pregnant so we have to wait until she has the baby and then I think we're going to do it," he continued noting that any movement on the project would have to happen after the birth of her first child with husband Adam Shulman.
Based on Meg Cabot's book of the same name, the original film, Princess Diaries released in 2001, starred Julie Andrews and Hathaway as Mia Thermopolis, a young girl who finds out she is the royal heir to the throne of the fictional Kingdom of Genovia. The successful series helped launched Hathaway's career at the time.
Marshall is also confident that Chris Pine, who portrayed Hathaway's love interest in the 2004 sequel, Princess Diaries 2: Royal Engagement, could also be willing to return for another installment. "Maybe," Marshall said of his involvement. "He's quite big now, you know."
According to reports, a fan recently asked Pine if he "prays every night for Princess Diaries 3 to which he responded "Have you been reading my diary?"