The paper, quoting people familiar with the deal, said negotiations are nearly complete. it did not say what the sale price might be.
Founded in 2006, video streaming start-up RayV has set up its headquarters in Los Angeles but has kept its research and development teams in Tel Aviv.
The company specializes in developing software for high definition video streaming over the Internet.
Acquiring RayV would be a boost for Yahoo which has suffered several setbacks of late in its strategy of broadening its video offerings. Bids to acquire the French video site Dailymotion and TV portal Hulu failed.
Yahoo this year launched negotiations with online video services Fullscreen Inc. and News Distribution Network Inc., the Journal said.
The report came shortly after US online entertainment powerhouse Netflix announced what it called significant expansion into Europe, promising viewers in six countries online video by the end of the year.
(Also see: Netflix to Launch in Germany, France, and Four Other European Countries)
Get your daily dose of tech news, reviews, and insights, in under 80 characters on Gadgets 360 Turbo. Connect with fellow tech lovers on our Forum. Follow us on X, Facebook, WhatsApp, Threads and Google News for instant updates. Catch all the action on our YouTube channel.