Amazon will allegedly launch a smartphone with a 5-inch, Full HD display later this year, Digital Spy said.
The Information claims to have obtained leaked documents detailing the device, said to be in the works under the codename of Project Aria.
The report states that the e-commerce giant held discussions with manufacturing partners in Europe and China last spring with a view to mass producing the handset.
Amazon is said to be planning to launch Project Aria with a significantly lower price tag than the latest model of the Apple iPhone, in line with its Kindle hardware strategy.
Previous reports suggest that the phone will feature 3D gesture controls, eye tracking, a 13-megapixel camera and a Snapdragon 800 processor.
However, more recent rumours suggest that Amazon is channelling its resources into living room hardware, with the retailer believed to be working on a set-top box.