Citing "people familiar with the matter," the Journal reported Tuesday the potential smartwatch would run Android and Google Now, the company's voice-assistant feature that runs on Google Glass.
It is expected to be capable of communicating with other devices including smartphones and tap into information from the wearer's Google account.
The Google watch would compete in the marketplace with a number of wearable computing devices such as the Galaxy Gear smartwatch from Samsung.
Sony has a smartwatch on the market, Microsoft is said to be working on one, and Apple has long been rumored to be preparing an iWatch for release.
The growing wearable computing market is predicted to be worth $10 billion by 2015.