The prisoners, from the West Bank and Gaza, were sentenced before the 1993 signing of the Oslo peace accords, Ami Palmor, the ministry official responsible for pardons, told a meeting of an Israeli Parliament committee meeting, The Jerusalem Post reported.
Releasing the men -- viewed by Israelis as terrorists and by Palestinians as prisoners of war -- is one of three major Palestinian demands for resuming the U.S.-brokered talks, officials said.
The other demands are using the 1967 prewar borders as the basis for negotiations and freezing Israeli settlement activity in the West Bank.
Some members of the Parliament, known as the Knesset, expressed displeasure with Palmor's announcement.
"Murderers must not be used as a tool in negotiations," said Miri Regev, a member of Prime Minister Binyamin Netanyahu's secular center-right Likud Party who called the Monday night Interior Committee meeting.
She called the meeting two days after Yuval Steinitz, Israel's minister of intelligence, international relations and strategic affairs, told Israel Radio "there will be some release of prisoners" as the crucial remaining step for his promised resumption of Middle East peace talks.
"I don't want to give numbers," Steinitz, a close Netanyahu ally, said Saturday. "But there will be heavyweight prisoners who have been in jail for tens of years."
Deputy Defense Minister Danny Danon, also of Likud, angrily responded Saturday, telling Israel Radio the prisoners were "not in prison for traffic violations. They're major terrorists who have murdered, some with their own hands. They've kidnapped soldiers, buried them alive, shocking stories."
U.S. Secretary of State John Kerry announced Friday Israelis and Palestinians had established "a basis" for resuming direct peace negotiations.
"If everything goes as expected," chief negotiators for each side will convene in Washington "within a week or so," Kerry said.
The caveat was apparently a reference to the prisoner deal, The New York Times said.
Some of the prisoners to be released were convicted of multiple murders, the Post said. Two from Gaza were convicted of stabbing to death two Israeli men in an apartment and then cutting off the dead men's ears as keepsakes, the Post said.
The families of many victims earlier made passionate public appeals against the prisoners' release.
Israel holds 550 prisoners serving life sentences, Col. Yuval Biton of the research branch of the Israel Prison Service told the committee.
Of those, 349 are identified with the Fatah confederation and revolutionary movement, 114 with the Hamas Sunni Islamic or Islamist organization, 60 with the Palestinian Islamic Jihad and 27 "otherwise affiliated," Biton said.
The Oslo accords were an attempt to set up a framework that would lead to the resolution of the Israeli-Palestinian conflict. It was the first face-to-face agreement between the Israeli government and the Palestine Liberation Organization.