Law firm Quinn Emanuel will file the suit on behalf of a group of investors – including BlackRock – who are seeking a total of €1.3bn (£1.1bn).
Earlier this year Quinn Emanuel filed a separate suit seeking €700m.
BlackRock’s involvement will add significant clout to the claims. It is the second largest private investor in the VW’s non-voting preference shares with a 3.35 per cent stake, second only to the Qatar Investment Authority. Additionally it’s the eighth-biggest holder of the ordinary stock.
“On behalf of their investors, a number of BlackRock-managed collective investment schemes are pursuing, alongside other institutional investors, legal action against Volkswagen AG in connection with Volkswagen’s failure to disclose to investors its use of ‘defeat devices’ that manipulated emission tests,” BlackRock said in a statement.
Last year the German car company admitted to duping emissions tests for up to 11m diesel cars.
The scandal caused VW’s share price to drop by 35 per cent in two trading sessions after it was revealed by US regulators.
Read more: VW's European market share has fallen again
It was found that software in the car detected when it was on a test stand and reduced harmful emissions to allow the vehicle to pass inspections.
In June, VW reached a settlement in the US to pay roughly $14.7bn (£11.2bn) to compensate vehicle owners and fund government programmes to boost emissions technology and mitigate air pollution.
VW is still facing fines and legal claims from other governments around the world.
Meanwhile, auto supplier Bosch has been dragged into the scandal, accused of hiding the use of Volkswagen’s defeat devices which it helped design.
According to court filing this week by VW owners in the US, Bosch “did not disclose its knowledge of the illegal defeat device in any ... communications with US regulators”.
Bosch has not been charged with any wrongdoing, however.