The offering could happen as soon as this summer if Chinese securities laws are revised to allow foreign companies to list, one source told the newspaper.
"Since our IPO in the US, we have stated that if regulations allow, we would consider a listing in China," Alibaba said in a statement to CNBC.
Shares of NYSE-traded Alibaba rose more than 3.5 percent to near $200 a share midday Thursday.
But the Journal report, citing sources, said Alibaba is considering ways mainland China investors could trade its shares.
Alibaba went public in New York in 2014 in a record $25 billion offering after Hong Kong would not accept the company's governance structure. The stock is up nearly 86 percent over the last 12 months and has a market capitalization of about $495 billion, as of Wednesday's close.
Chinese authorities have been looking for ways to attract foreign capital and develop domestic financial markets.
In late February, Reuters reported, citing six sources, that China's securities regulator is considering a plan to give some of the country's largest tech companies a shortcut to list their shares domestically. Liu Shiyu, chairman of the China Securities Regulatory Commission, subsequently declined to confirm the report to the newswire, but said, "We will not waver from reforms (to make China's capital markets) more market-based, law-based and international."
— Reuters contributed to this report.