Director Katsuhide Motoki will again direct and singing idol-turned-actor Eiji Wentz will reprise his role as Kitaro, a half-human half-yokai (creatures and supernatural beings).
He is joined by returning cast members Rena Tanaka, Yo Oizumi, Kanpei Hazama and Shigeru Muroi. Mao Inoue, the first film's female lead, will not be returning.
The sequel will aim to expand its demographic to include an older audience, with a subplot of forbidden love between a human and yokai, played by new cast members Masato Hagiwara and Shinobu Terashima respectively. Veteran actor Ken Ogata (A Long Walk) will play Kitaro's nemesis.
Shochiku released the first film at the beginning of the key Golden Week holiday period on April 28. Opening on 339 screens, it reached the standard $9.15m (Y1bn) mark of a box office hit faster than any previous release in the studio's history and stayed in the top ten for seven weeks grossing $21m (Y2.3bn).
Gegege No Kitaro became Shochiku's biggest hit in a difficult year for the studio, with big-budget releases such as Midnight Eagle, Vexille and Genghis Khan underperforming at the box office. Smaller films such as Tokyo Tower: Mom And Me And Sometimes Dad ($16.14m) and Dai Nipponjin ($10.17m) helped pick up the slack. The studio has recently steered clear of releasing Hollywood films.
The film marked the first collaboration between Shochiku and Hong Kong-based special effects house Centro Digital Pictures (Kill Bill 1&2, Shaolin Soccer), which handled rendering of the film's major action scenes, leading a consortium of over thirty CG companies.
Gegege No Kitaro is based on Shigeru Mizuki's famous character, created in 1954 and popularised in the Gegege no Kitaro manga series and animated TV shows produced from the 60s to the present.
The film went into production late last year and is set for a summer release.