Set for release in 2009, Avatar is Cameron's first feature since the Oscar-winning Titanic.
Using a mix of live action and animation, it will be filmed in 3D for release in a new digital 3D format.
Some scenes will be shot in Los Angeles.
Written by Cameron, the film is set 150 years in the future.
It tells the story of a wounded former marine who is "thrust unwillingly into an effort to settle and exploit an exotic planet rich in biodiversity, who eventually crosses over to lead the indigenous race in a battle for survival".
Cameron came up with the idea more than 10 years ago but has been waiting for the technology to create his vision.
He wanted a "new face" to play lead character Jake Sully and held auditions throughout the world before deciding on Worthington, who has had parts in Somersault and Dirty Deeds.
Zoe Saldana, who starred in Pirates of the Caribbean: Curse of the Black Pearl, will play Sully's extra-terrestrial love interest.
Cameron, a self-confessed fan of science fiction and action genres, conceived the film as a potential franchise with future instalments.
He described it as both "epic" and his "dream project".
"We're creating an entire world, a complete ecosystem of phantasmagorical plants and creatures, and a native people with a rich culture and language."