The film, which is a modern update of the classic Western, co-stars Harrison Ford as one of the residents of the desert town attacked by aliens.
Craig is to play the gun-toting stranger who becomes the only hope the town has of fighting off the unknown forces.
Speaking to Latino Review , Favreau said: "Though Daniel Craighas never been a Western gunfighter, he has been James Bond. He has been the lead in crime dramas, like Layer Cake .
"He understands the nature of what it is to be a badass hero."
The actor replaced Robert Downey Jr last year in the sci-fi drama, after the latter dropped out to star in the sequel to Sherlock Holmes.
