The device, to be shown this month, is based on LG's Optimus G model, said the person, who declined to be identified because the project isn't public.
Jinny Lee, a Seoul-based spokeswoman for LG, and Shari Yoder Doherty, a spokeswoman for Google, declined to comment.
LG's Optimus G, which went on sale in South Korea last month, has a 4.7-inch screen and runs on a processor made by Qualcomm Inc. for fourth-generation Long Term Evolution, or LTE, networks offering faster Internet connections.
Technology blogs, including BGR, have posted what they say are leaked photos of the new Nexus phone with LG's logo.
LG, the world's No. 2 TV maker, has also worked on a set using Google software.