The company has already sent out a prototype to developers and the finished product will be focused on enhancing smartphone and tablet gaming, and it could be revealed before the end of 2014.
The buzz created around virtual reality thanks to Facebook's acquisition of Oculus Rift is, according to Engadget, the prime motivator behind Samsung's decision. The tech site's sources claim that the device will be competitively priced, use an OLED display and will be focused on bringing a new dimension to Android games.
Therefore, the headset is going to be marketed as a smartphone and tablet peripheral and could, potentially, be mobile. Although how practical that would be in real life remains to be seen.
As Engadget points out, VR headsets need a wired connection to ensure everything works simultaneously.
The version of the device being used by developers works with the latest generation of Samsung smartphones, but the consumer version may only work with the company's next generation of handsets that have more powerful processors.
As well as a VR handset, Samsung is heavily tipped to launch its own take on Google Glass, reportedly called "Gear Glass" at this September's IFA tech show in Germany.