The pair signed an online ad revenue sharing deal earlier this year, and Microsoft and others have complained the deal threatens to limit the web ad market for advertisers.
The Wall Street Journal reports the two firms have entered into negotiations with the DoJ to find a resolution that would address anti-trust fears on their agreement.
The paper cites lawyers involved in the negotiations. The Google/Yahoo deal, signed after Yahoo rejected a takeover bid by Microsoft, will see Google running ads on Yahoo's search pages.
The extra revenue generated for Yahoo will help justify its rejection of the Microsoft takeover, in that it will help return greater value to those disgruntled Yahoo shareholders who saw value in a Microsoft takeover.
Microsoft and others fear Google will be in a stronger position to control web ad rates however.