Apple is in advanced talks with major studios for the rights to rent movies via iTunes, according to the UK Financial Times.
The new video-on-demand service is expected to launch in the US and the UK in Autumn, costing $US2.99 for a 30-day rental.
Digital rights management software will protect movies from being copied and allow them to be downloaded by Apple TV and then watched on a normal TV. iTunes customers will also be able to move films to iPhones and iPods.
The service is expected to present competition for other online movie rental companies such as Blockbuster and Netflix.
Apple already has distribution deals with Disney and Paramount for its existing service on the US iTunes which allows films to be downloaded. Some of the movie studios that did not want Apple to sell their content are more likely to allow the company to rent them through the service as it would not impact DVD sales.