The online retailer has recently been demonstrating versions of the handset to developers in San Francisco and Seattle. It intends to announce the device in June and ship to stores around the end of September, the Journal quoted unidentified sources as saying.
Amazon has made great strides into the hardware arena as it seeks to expand sales of digital content and put its online store in front of more users. It recently introduced the $99 Fire TV video-streaming box, and its Kindle e-readers and Fire tablets already command respectable US market share after just a few years on the market.
Rumours of an Amazon-designed smartphone have circulated for years, though executives have previously played down ambitions to leap into a heavily competitive and increasingly saturated market.
Apple and Samsung, which once accounted for the lion's share of the smartphone market, are now struggling to maintain margins as new entrants such as Huawei and Lenovo target the lower-income segment.
To stand out from the crowd, Amazon intends to equip its phones with screens that display three-dimensional images without a need for special glasses, the Journal said.
Amazon officials were not immediately available for comment.