Watts and Schreiber met while making the 2006 film, "The Painted Veil." They are already the parents of a 1-year-old son, Alexander.
Usmagazine.com said the 39-year-old actress recently entered her second trimester with her second baby.
Watts's best friend, Australian actress Nicole Kidman, is expecting her first child this summer.
Watts is best known as the star of "The Ring" and the 2005 remake of "King Kong."