The two companies are said to be planning to unveil the new capability at a June 20 event in Menlo Park, Calif., ArsTechnica reported Monday.
The announcement is seen as a response to Vine, which gave users an easy way to record and share videos as long as six seconds when it launched in January.
The app was introduced by Twitter, which bought the service in October.
Adding video would give Facebook a way to keep users more engaged with Instagram in the face of increasing pressure from the popular Vine app, which has overtaken Instagram when it comes to sharing on Twitter.
Instagram's videos would reportedly be limited to 5 to 10 seconds, similar to the 6-second limitation on Vine videos.