Solo Moto magazine claims the Italian will take on Bayliss in a head-to-head battle on March 14 in Qatar, saying the deal is "said and done".
The duel will take place during the weekend of the second round of the 2009 Superbike World Championship at the Losail circuit.
Rossi is expected to race a Yamaha R1 - as used by factory riders Tom Sykes and Ben Spies in 2009 - while Bayliss will be on the familiar Xerox Ducati.
Bayliss retired from the World Superbike scene after romping to his third championship in 2008 on the Ducati.
The Australian's dominance of an increasingly competitive series earned him the Rider of the Year award from the well-respected Italian magazine Moto Sprint ahead of Rossi, who won his sixth world championship in MotoGP's premier class, his eighth overall.
The 29-year-old Rossi is thought to be unhappy at the snub, and has agreed to the race in a bid to hammer home his supremacy.
Rossi recently said he was keen to take Bayliss on one-versus-one, telling Corriere dello Sport: "If there was an opportunity and the right date then I would race there tomorrow.
"I like World Superbikes to be mad, I like to watch it and I'd love to ride in it, the problem is the dates.
"I do not know when, but I hope that I can make a race in WSB. I am sad that I would not be able to race against Bayliss on track now because I would like to challenge him on a superbike. Maybe, if I ask him he might even come back for one race for the challenge."
There has been no official confirmation from either rider.
Source:
http://eurosport.yahoo.com