The Channel 4 sitcom focuses on Dan, a "childish idiot trapped in an adult's life". A useless teacher, Dan's friends are the mismatched Jo and Brian. His life also involves his kind-hearted mother and his no-nonsense aunt.
Davies - who created, writes and stars in the show - broke the news on Twitter by posting: "Hello there, really chuffed to let you know that Man Down will be back for a third series next year."
In a statement later released by Channel 4, he added: "I'm so thrilled that Channel 4 want me to spend the next sixth months locked in my home crying over a keyboard in my pants. The characters in Man Down Series 3 are really going to pay for their generosity..."
Nerys Evans, Channel 4's Deputy Head of Comedy, says: "We're delighted to have Greg back with the Man Down team. We are in awe of quite how many utterly humiliating situations he's willing to put himself through for the love of comedy. But we're definitely in no mood to ask him to stop!"
Series 2 of Man Down, shown in June and July 2015, launched with an audience of over 1 million viewers and positive press reviews. The six episodes saw the character of Aunt Nesta, played by Stephanie Cole, move into the family home in which Dan still lives.
It is as yet unclear whether Emma, a senior colleague of Dan's with whom he has fallen in love, will return. Played by Jeany Spark, the end of Series 2 saw Emma reject Dan's proposal of marriage and announce she had been appointed head teacher of a school overseas.
It has also been revealed today that GameFace, Roisin Conaty's sitcom which also stars Mike Wozniak has been given a full series on E4. Meanwhile, last week Dave confirmed it had ordered two more series of Taskmaster, the comedy challenge show hosted by Greg Davies.
Man Down is filmed in the school where Greg Davies used to teach before starting a career in comedy. Talking in an interview published on British Comedy Guide, he said of his former career: "I've never disguised the fact that I wasn't happy in teaching. But the reason was that I wanted to do comedy. I would have been a very unhappy security guard or a very unhappy greengrocer. It's to do with that nagging feeling at the back of your mind that you really want to try something and you haven't got the courage to do it. I wasn't a happy teacher, but I also wasn't an absolute psychopath like the teachers I portray on screen."