The giant Internet retailer is expected to unveil the phone on Wednesday.
AT&T, the nation's second-largest wireless carrier, already carries Amazon's Kindle tablets and electronic readers.
The long-awaited smartphone will include retina-tracking technology and three-dimensional images that can be seen without special glasses, the Journal said, citing unidentified sources.
Amazon is expected to launch the device at a special event in Seattle, and begin shipping phones by the end of September, the Journal reported. It has already unveiled versions to a limited number of developers, it added.
Read the Journal's full story here.