The internet retailer is planning to release an 8.9-inch iteration of its colour tablet in time for Christmas, according to Reuters.
Amazon released its first generation Kindle Fire in the US in November last year. The device hit a sales spike during the holiday period, a feat the firm will be keen to emulate with its successor.
The Kindle Fire 2's hardware specs are yet to surface, but the report does note that the tablet could retail at around the £200 mark. Previous rumors suggested that both 7-inch and 9-inch models will be available.
The news follows reports that Apple is planning to enter the budget tablet market with a device dubbed the iPad Mini. Amazon's Kindle range has been touted as the greatest threat to Apple's market share in the sector, though recent figures suggest sales have dipped.
Amazon is yet to announce plans to release the first generation Kindle Fire overseas, though the firm has been tipped to launch a new Kindle e-reader with front lighting in the UK in July.