From The Hollywood Reporter.com:

On the heels of its surprise summer hit feature "Cats & Dogs," Warner Bros. is moving forward on a live-action/CGI sequel and has hired helmer Kevin Lima ("102 Dalmatians") to direct it. Bruce Berman's Village Roadshow Pictures and Andrew Lazar's Mad Chance Prods. will return to produce. "Cats & Dogs 2" is being written by the film's original writers, John Requa and Glenn Ficarra, and will continue the wars between canines and felines. Many of the original film's characters are expected back.

http://www.hollywoodreporter.com/hollywoodreporter/film/brief_display.jsp?vnu_content_id=1302842