According to the Doctor Who News Page, McCoy made the announcement on Friday at Armageddon Expo in Auckland, New Zealand. (The New Zealand Herald confirms the news.) The site reports that "it is understood" the actor met last week in Wellington with Jackson and his parter Philippa Boyens, "where he was offered the role, but that no contracts have yet been signed."
McCoy, 67, starred in Doctor Who from 1987 to 1989, and reprised the part in 1993 and 1996. A veteran of the London stage, he was considered for the aging Bilbo Baggins in The Lord of the Rings trilogy, a role that ultimately went to Ian Holm.
Radagast the Brown, an ally of Gandalf and a friend of the skin-changer Boern, is only mentioned in J.R.R. Tolkien's The Hobbit. He doesn't actually appear until The Fellowship of the Ring, where he's unwittingly used by Saruman to lure Gandalf to Isengard (the character doesn't make it into Jackson's movie). So, obviously, it's unclear how Radagast will fit into The Hobbit adaptation.