The work could make it easier for companies to migrate applications between their data centers and Amazon's server farms and make it easier to recover data from Amazon in case of disasters, The Information said, citing an unnamed source.
VMware's stock rose about 2 percent after the report.
Meanwhile, Microsoft has been busy refining on-premises data center software that mirrors that of its Azure public cloud. And Google has taken its first step toward doing more with on-premises data centers through its partnership with Nutanix.
The potential expansion of the VMware partnership, though, wouldn't be the first thing AWS is doing to work with on-premises data centers.
Amazon and VMware announced their partnership in October, targeting a mid-2017 launch for VMware virtualization software running atop the Amazon cloud, but the new technology might not be available until the end of the year or the beginning of 2018, The Information said.
VMware stock was up more than 2 percent and Amazon stock was up slightly following the Information report.
AWS did not immediately respond to a request for comment. VMware had no comment.