According to the New York Daily News, Donatella Versace asked the singer to front the spring promotional push at a perfume launch for the fashion firm in London last month.
The newspaper says Madonna's representatives have confirmed talks are ongoing and speculates that the deal could include TV as well as print ads, adding "there's also talk of Madonna collaborating on a fashion line".
The paper quotes a source as saying: "Madonna is coming up with ideas for the campaign. She wants the ads to be provocative and sexy. She wants everyone to know how good she looks at 46."
The photo shoot for the campaign, by Mario Testino, is due to get under way at the end of the month.
Madonna's previous forays in advertising have included work for Maybelline New York and Gap.
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