The US sports network and Phillipines media reported that Pacquiao, considered the pound-for-pound world champion after flattening England's Ricky Hatton in the second round in May, will meet Cotto on November 14.
Reports also had the fight at 145 pounds, two below the welterweight limit and five above the light-welterweight category maximum.
Promoter Bob Arum handles affairs for both Pacquiao and Cotto.
The reports come after moves by unbeaten US star Floyd Mayweather Jnr and World Boxing Association welterweight champion Shane Mosley to try and lure Pacquiao into a deal.
Mosley, a US veteran, said he was willing to take only 40 percent of the purse and would agree to fight at the light-welterweight limit in order to strike a deal with the Filipino star.
Mayweather, whose ring return from retirement was pushed back to September due to a rib injury, is the fighter most fans would enjoy seeing Pacquiao face in a showdown between the former and current pound-for-pound kings.
But Mayweather said last week it was unlikely he would fight Pacquiao because both camps insistent on the lion's share of a 60-40 fight purse split. Mayweather also has bitter feelings toward Arum, his former promoter.
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