Russia is holding talks with Venezuela to license the manufacture of Kalashnikov rifles there, Russia's state arms exporter has confirmed.
Moves by Mr Chavez to boost his armed forces have worried the US
On Tuesday, Venezuelan President Hugo Chavez said Russia planned to build two munitions plants in the country.
Moscow has already signed a deal to supply Venezuela with 100,000 Kalashnikov assault rifles.
The move is likely to worry the US, which regards Mr Chavez as a destabilising influence in the region.
In May, the US State Department banned arms sales to Venezuela because of concern over its contacts with Iran and Cuba and what it called Venezuela's lack of support for counter-terrorism efforts.
'Defend every street'
Mr Chavez made his announcement during a visit to Ecuador to sign a series of energy deals.
"The Russians are going to install a Kalashnikov rifle plant and a munitions factory," he said. "So we can defend every street, every hill, every corner."
Arms exporter Rosoboronexport confirmed that talks were taking place, but did not give any details of the timescale or proposed production capacity of the plant, the Associated Press news agency reported.
Mr Chavez also told reporters that 30,000 of the promised Kalashnikov assault rifles were due to arrive in June, a fact later confirmed by the Russian manufacturer.
Correspondents say that the US is concerned by Venezuela's moves to build up military hardware.
In April, Venezuela took delivery of three Russian-built military helicopters - the first of a total of 15 it has so far ordered from Moscow.
They would help to protect Venezuela if the US ever mounted an invasion, Mr Chavez said at the time.
The Venezuelan government has repeatedly accused Washington of trying to destabilise Mr Chavez - an allegation rejected by US officials.