With an estimated budget of $72m, the film is biggest ever to shoot in Hungary. The production also benefits from the country's 20% tax rebate, which helped Budapest woo the shoot away from Prague, where del Toro filmed Hellboy in 2003.
Sixty percent of the film will shoot at the new Korda Studios in Etyek, outside Budapest. As del Toro begins filming, construction crews are continuing work on the facility, including what is being billed as the world's largest indoor water tank.
Based on Mike Mignola's comic book series, Hellboy 2 stars Ron Perlman, Selma Blair and Doug Jones. The sequel sees the title character squaring off against mythical characters who want to take over the earth. Universal plans an August 2008 release in the US.
Earlier this year del Toro said that he is planning a third installment in the franchise. Hellboy, released in 2004, grossed nearly $100m worldwide.