Xerox would be divided into separate hardware and services companies in the split, which could happen as soon as Friday morning when Xerox reports earnings, sources told the Journal. Investor Carl Icahn would get three board seats at the services arm of the company, the sources said.
"We think this is a major move and will greatly enhance shareholder value," Icahn told CNBC. "I have had several meetings with [CEO] Ursula Burns and applaud and respect her for doing what she believes shareholders want — just as John Donahoe did with eBay and PayPal."
Xerox shares were down 1 percent in after-hours trading trading Thursday.
Icahn disclosed a 7.13 percent share in Xerox in late November, making him the second-largest holder. Renowned as an activist investor, Icahn has also called for insurance giant American International Group to break up.
Earlier this week, the insurer announced a series of strategic actions, including divestiture or sale of several units, an IPO of its United Guaranty business and a return of $25 billion to shareholders over the next two years. However, it said a full breakup of the company would detract from shareholder value.
"I hope and believe the results will be just as good and also hope that the board and management of AIG will respect the wishes of shareholders the same way, if it turns out, which I think it will, that the majority of shareholders want to see the company split," Icahn told CNBC on Thursday.
Xerox told CNBC that it could neither confirm nor deny the Wall Street Journal report. Burns is slated to appear on CNBC's "Squawk Box" Friday at 7 a.m., ET.
AIG declined CNBC's request for comment.
— CNBC's Scott Wapner and Peter Schacknow contributed to this article.