Kagan, 50, who argues the US government's position before the Court in her current job, would replace retiring liberal Justice John Paul Stevens, 90, if she is confirmed by the Democratic-controlled Senate.
A former Harvard law professor with close ties to Obama and Democratic powerbrokers, Kagan would be the fourth woman to serve on the top US court, and the president's second pick after he chose Justice Sonia Sotomayor last year.
She would also be the youngest member of the current Court and, given her advocacy experience, may have the potential to emerge as a persuasive voice who could bridge the gaps between its liberal and conservative wings.
A high-powered legal scholar and veteran of the Clinton White House, Kagan -- unlike most Supreme Court picks -- has not served for years as a judge, meaning she has no damaging legal paper trail that could derail her confirmation.
She is also said to have cultivated ties with some conservatives, which could help her prospects of confirmation.
The US president has the chance with the lifetime appointments of Supreme Court associate justices to wield influence on US politics, law and the social direction for years after he leaves office.
Kagan would not likely however change the ideological balance of the Court, which is currently weighted towards conservatives.
Republicans may make a show of opposing Kagan's nomination but many observers believe that absent some unknown revelations, she is likely to win Senate confirmation.
She was confirmed to serve as solicitor general last year by 61 votes to 31 in the Senate.
Obama was expected to appear with Kagan at the White House at 10:00 am (1400 GMT) Monday to make the announcement, The New York Times said.
Though Kagan is currently serving as solicitor general, she has no direct judicial experience. Some liberal and legal interest groups had pressured the president to chose someone from outside the "judicial monastery".
Obama said in April, after praising the 34-year tenure of Stevens, that he would chose a replacement who "knows that in a democracy, powerful interests must not be allowed to drown out the voices of ordinary citizens."
Kagan has spent years in academia teaching the law, rather than arguing cases on the courtroom floor, a factor that may have impressed Obama, a former constitutional law professor.
When she was facing Senate confirmation as solicitor general, she was praised by Attorney General Eric Holder for her "intelligence, experience and commitment to the rule of law."
Kagan would be only the fourth woman to sit on the nation's top court after Sandra Day O'Connor, Ruth Bader Ginsburg and Sonia Sotomayor, who made history as the first Hispanic justice.
Stevens, 90, joined the bench amid the traumatic fallout of the Watergate scandal in the 1970s, and will step down after 34 years.
A 1981 graduate of Princeton University, Kagan completed her studies at Havard Law School in 1986, leaving just two years before Obama entered the prestigious institution.
She clerked for a judge on the Washington US Court of Appeals and for Justice Thurgood Marshall at the Supreme Court, before entering private practice from 1989 to 1991.
She was professor of law in Chicago and was chosen by then Clinton to serve as his associate counsel and then advisor on domestic policy between 1995 and 1999.
With the Clinton administration, Kagan cultivated contacts with many of the lawyers now serving in the Obama administration.
She was named by Clinton in 1999 to fill a vacancy at the Washington DC appeals court, and went on to become a visiting professor of law at Harvard in 1999 and then professor of law in 2001. She was appointed dean in 2003.
In a letter to the Harvard Law School when Obama chose her as solicitor general, Kagan said she had accepted the nomination "to help advance this nation's commitment to the rule of law at what I think is a critical time in our history."
Now as only the fourth woman to sit on the Supreme Court, she is once again blazing an historic trail.
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