The source, who spoke on condition of anonymity, confirmed to the Associated Press that Franklin was gravely unwell.
The 76-year-old cancelled planned concerts earlier this year due to health concerns and was ordered by doctors to rest for two months.
Last year Franklin indicated her plans to retire from touring following the release of a new album.
Separately, celebrity website TMZ has also reported that a "long-time friend was told a week ago 'prepare yourself, she's dying.'"
Source close to Aretha and a longtime friend tells TMZ he was told a week ago, "Prepare yourself, she's dying." The source adds Aretha was down to 86 pounds and her health was failing. The source says 2 weeks ago everyone in Aretha's circle was told "she could go any time."
Franklin, whose career spans seven decades, is best known for songs including Respect and (You Make Me Feel Like) A Natural Woman.
The 18-time Grammy winner is one of the best-selling artists of all time and was inducted into the Rock and Roll Hall of Fame in 1987.
In 2017, Franklin told a local Detroit news station that she would be retiring after collaborating on a new album with Stevie Wonder.
"I will be recording, but this will be my last year in concert," she told WDIV Local 4. "This is it."
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