According to the Financial Times, the company could reveal its latest technology at its Worldwide Developers Conference on June 2.
Apple is said to be working with a number of third-party smart product makers, who would be certified to connect with the iPhone.
The software could be used on board an array of household appliances, and may even switch the lights on automatically when a paired handset is detected at the front door.
Smart home technology is a growing sector, which competitors such as Google have already invested in. Earlier this year, the Android developer acquired smart thermostat and smoke alarm maker Nest for $3.2 billion (£1.95bn).
Privacy is a concern which Apple is aware of, one source said, although Apple believes it has the upper hand after a recent filing suggested Google would like to use smart appliances to show advertising in the future.
Apple has recently moved in new directions, making a car-friendly version of its operating system iOS called CarPlay available to certain car manufacturers on their dashboards.