Someone pinch me there's no way this is actually happening!!!!
According to Disney's Tracker Board, Princess Diaries 3 is in the works! Now, Julie Andrews said a few years ago that she'd be down to be in another one, but she didn't think it would happen because of Anne Hathaway (aka, she has better things to do and is busy busy!!)
But The Princess Diaries was originally based off those books by Meg Cabot, so there's still a TON of material that could be used!! Granted, the books took a different direction than the movies (let's just say Michael is still around!!), but still, there is so much material there that some sort of story can definitely happen! There's even an "adult" book that just came out recently as Mia get's older.
I adored Princess Diaries 1, and I enjoyed 2, so I'm SUPER happy to see the possibility of a 3!!! Eeeeek!