The 47-year-old singer and choreographer has reportedly been offered the huge sum as a Development Deal by network ABC.
If she agrees to be part of the ballroom show, they will then also allow her to become a judge on the US version of 'The X Factor'.
The former 'American Idol' judge - who controversially left the show's panel last year after seven series - is said to have met with media mogul Simon Cowell about joining his stateside version of reality show 'The X Factor', which is a direct rival to her previous programme.
Simon was also a judge on 'American Idol' but announced earlier this year he is leaving to start his new project.
It is not yet clear whether Paula will compete on 'Dancing With The Stars' or appear in another capacity, such as a judge, but ABC have reportedly been trying to get the 80s idol on board for a number of years.
A source close to Paula told website MSN.com: "She's been wanting to make her mark on a network long term.
"She's had reality shows and such, but she hasn't had one place to develop the Paula brand. If ABC were to give her that chance, she'd probably do it, even if being on 'Dancing With the Stars' was the trade-off."
Paula has until March 22, when 'Dancing With The Stars' begins, to make up her mind.