Other technological innovations include a performance-capture stage, called The Volume, which is six times larger than previously used and an improved method of capturing facial expressions. The tool is a small individually made skull cap with a tiny camera attached to it, located in front of the actors' face which collects information about their facial expressions and eyes, which is then transmitted to the computers. This way, Cameron intends to transfer about 95% of the actors' performances to their digital counterparts. Besides a real time virtual world, the team is also experimenting with a way of letting computer generated characters interact with real actors on a real, live-action set while shooting live action.

In January 2007, Fox announced that the studio's Avatar would be filmed in 3D at 24 frames per second. Cameron described the film as a hybrid with a full live-action shoot in combination with computer-generated characters and live environments. "Ideally at the end of the day the audience has no idea which they are looking at," Cameron said. The director indicated that he had already worked four months on nonprincipal scenes for the film. Principal photography began in April 2007, and was done around parts of Los Angeles as well as New Zealand. The live action is shot with the proprietary Fusion digital 3-D camera system developed by Cameron and Vince Pace. According to Cameron, the film will be composed of 60% computer-generated elements and 40% live action, as well as traditional miniatures. The performance-capture photography would last 31 days at the Hughes Aircraft stage in Playa Vista, Los Angeles, California. In October, Cameron was scheduled to shoot live-action in New Zealand for another 31 days.