Nissan will invest about 150 billion yen ($1.22 billion) in Renault, business daily Nihon Keizai Shimbun (Nikkei) said, quoting sources close to the negotiations.
In turn, Renault will raise its stake in the Japanese automaker to 44.4 percent from 36.8 percent by spending about 200 billion yen to convert 540 million warrant bonds issued by Nissan into stocks, the newspaper added.
The French carmaker will have the right to veto any major management decisions by Nissan following the increase in its stake.
A Nissan spokesman declined to comment on the report.
The two automakers have said they are in advanced talks on strengthening the alliance and that Nissan is in a position to buy a stake in the French automaker.
Renault Chairman Louis Schweitzer and Nissan Chief Executive Carlos Ghosn were scheduled to meet this weekend and media has reported that a that a decision could come as soon as Monday.
Renault bought 37 percent of Nissan, Japan's second-largest car company, in May 1999 and part of the alliance agreement stipulated that Nissan could one day purchase Renault shares when it was financially strong enough to do so.
On Friday, shares in Nissan tumbled 5.65 percent to 585 yen on increasing signs that it could soon take a stake in Renault.
The Nikkei said the two firms also agreed to set up an equally owned unit in Europe in 2002 to strengthen their ability to jointly plot global strategies.