The group, which sells goods such as Cadbury's chocolate and Fairy washing up liquid for £1, has appointed investment bank Rothschild to help handle the listing, according to The Sunday Times.
Other advisers are expected to be brought on board in the next few weeks for a possible flotation in early 2014 in a move that would see Poundland join a growing list of firms rushing to go public and take advantage of buoyant stock market conditions.
Merlin Entertainments is expected to float in the coming weeks, following other recent high-profile initial public offerings for Royal Mail and estate agency Foxtons.
Poundland is said to be valued at between £700 million and £800 million and a float would create a windfall for US private equity owner Warburg Pincus, which bought the group for £200 million in June 2010.
West Midlands-based Poundland started out as a single store in Burton-upon-Trent in 1990 and has since grown to 488 outlets, with aims to more than double its empire to 1,000.
Discount retailers have been expanding at a rapid rate on Britain's high streets since the financial crisis and recession as they have enjoyed surging demand from cash-strapped shoppers.
But Poundland, which served 4.5 million customers a week during the year to the end of March, said recently it increasingly appeals to a wider range of shoppers, adding that one in five of its customers are from the wealthiest section of the population.
Poundland employs more than 11,000 staff and is the largest single price discount retailer in Europe.
The company is chaired by Andrew Higginson, former finance and strategy boss at Tesco.
Warburg Pincus declined to comment.