A Democratic political operative close to McCaskill confirmed the move, and said McCaskill would make the announcement Tuesday.
McCaskill's office refused to discuss the announcement, but a McCaskill run against Talent had been widely expected among Missouri Democrats for weeks.
McCaskill has been state auditor since 1999 and faced re-election next year. She ran unsuccessfully for governor last year against Republican Matt Blunt (search), losing by about 3 percentage points after knocking out incumbent Democratic Gov. Bob Holden (search) to reach the November election.
Some Democrats have been encouraging McCaskill to run, seeing her as the party's best hope to unseat an incumbent with a major financial advantage.
In July, Talent reported raising nearly $2.6 million in the previous three months, giving him a major financial lead over a Democratic challenger.
Talent's report showed he raised a total of $3.9 million in the first half of the year and had $3.4 million cash on hand for a re-election campaign.
Talent spokesman Rich Chrismer said the senator is prepared for any announcement and is focusing on his official duties.
McCaskill will make the announcement in the tiny town of Houston, at a feed mill where her father once worked, seen as a bid to win rural votes. The uphill battle to win over rural voters is underscored by her most recent showing in sparsely populated Texas County, which includes Houston. In the 2004 governor's race, Blunt won the county with 60 percent of the vote against McCaskill's 38 percent.