Bernstein analyst Tim Anderson said Allergan was a good fit and Pfizer might feel now was the right time to do a deal, given a recent market correction that has made Allergan look cheap.
The merger talks are in early stages, and may not yield an agreement, while other details are unclear, The Wall Street Journalsaid.
The Financial Times, which reported the talks later, described the talks as preliminary. Reuters was not immediately able to confirm the reports.
Allergan became the third-largest generic drugmaker in the United States after combining with Actavis in March.
Its chief executive, Brent Saunders, has been eager to do deals, having first orchestrated the sale of Forest Laboratories Inc, where he was initially CEO, to Actavis, then using the latter to seal the $66 billion purchase of Allergan.
Following the Actavis tie-up, Allergan sold its generic drugs business to Israel's Teva Pharmaceutical Industries in July for $40.5 billion in cash and stock. And Saunders said after that he hoped to use those
proceeds to do another large, "transformational" merger.
In its first full quarter after the Actavis deal, Allergan reported second-quarter revenue of $5.76 billion, led by $632 million in sales of wrinkle blocker Botox. Other top-selling drugs include dry eye treatment Restasis and Alzheimer's drug Namenda.
Pfizer recently reported third-quarter revenue of $12.1 billion, including $1.58 billion for its Prevnar pneumococcal vaccines and $947 million for pain drug Lyrica.
While Pfizer wanted to buy AstraZeneca in part to boost Pfizer's pipeline of cancer drugs, a deal with Allergan would involve dermatology drugs and generics.