The Brit will sign a fresh two-year contract, with the option of a third, worth £40million every 12 months, according to The Sun.
It would see Hamilton pocket an eye-watering £770,000 a week.
Mercedes supremo Toto Wolff is reportedly keen to tie down the F1 champ before this weekend’s season-opening Australian Grand Prix in Melbourne.
The 33-year-old is the most successful British racing driver of all time having won four world titles.
But he admitted he still questions himself at the start of every season whether he can challenge for more honours
“I still love racing, I still love the challenge of every year getting myself in shape,” he said.
“People say ‘it’s never gonna go’ but maybe one year you don’t feel good in the car — so I’m always excited by that.
“At the end of the season of course I am wondering to myself ‘do I want to keep racing?’ I have to ask myself that, for sure.”