The "X-Men Origins: Wolverine" star and Watts began dating in 2005 and, in 2009, she confirmed the actor had given her a ring, but they did not want to rush into marriage.
Five years later, the couple is ready to exchange vows, according to OK! magazine.
A source tells the publication, "Marriage was never a big deal to Naomi or Liev, but now their boys are asking why they aren't married, so they gonna (sic) take the plunge."
The couple is reportedly planning to tie the knot close to the holidays and want to make the intimate celebration a family affair.
The source adds, "They would do anything for their kids, and they think it will be a fun family thing to plan together.
"It will end up being a small, intimate wedding, with just immediate family and friends. Their sons will be the only members of the wedding party."
If the reports are true, it will be the first wedding for the pair, who welcomed first son Alexander in 2007 and the second, Samuel Kai, in 2008.
Schreiber's representative would not comment on the report, while Watts' had not responded to WENN's request for confirmation by press time.