The news comes not from an anonymous source for once but from NPD DisplaySearch analyst Richard Shim, who says that production of a 10.1-inch Fire will commence in the third quarter this year.
The analyst told Cnet the oversized tablet will have a 2560x1600 pixel display, equating to 299 pixels per inch, sharper than Apple's 264-pixel-per-inch iPad retina display.
The model follows a smaller 7-inch model, originally released in 2011, while Amazon also released an 8.9 inch model last year.
Mr Shim also said that Amazon is also working to improve the resolution of its existing tablets, bringing them in line with that 300-ppi benchmark it has now set for itself.
As of October 2012, the Kindle Fire is the second-best-selling tablet after Apple's iPad, with about 7 million units sold according to estimates by Forrester Research.