The music mogul will reportedly be given the title - which will make him Sir SimonCowell - by Britain`s Queen Elizabeth in her birthday honours list next month after being recommended by former Prime Minister Gordon Brown for his charity work, in particular his efforts with the chart-topping single `Everybody Hurts`, which raised money to help victims of the Haiti earthquake.
A source said: "Gordon Brown was very keen for Simon to get proper recognition for his work.
"He was particularly impressed by the way Simon responded to his suggestion to release the record for Haiti by dropping everything to ensure it was a success.
"And there`s no doubt Simon has brought as great deal of happiness to millions of people with his music and TV shows.
Close friends of Simon - whose TV shows are shown in 27 countries - believe he "deserves" the honour because of the good work he does to help others.
An insider told the Daily Mirror newspaper: "It would be an absolutely huge achievement and a wonderful tribute to all he`s achieved professionally.
"Simon deserves the honour because he does so much work behind the scenes for charity and publicly supports good causes.
"He has also generated millions in the music and entertainment industries, created thousands of jobs and helped make Sony a multinational conglomerate."
However, the news is likely to come as a shock to 50-year-old Simon, who has previously said his chances of being knighted are "below zero".
The source added: "Simon has always joked he`d be last in line for a knighthood. But, deep down, it`s his dream."
Other entertainment stars to have previously been knighted by the queen include Sir Michael Caine, Sir Mick Jagger and Sir Paul McCartney.