Quoting documents it had obtained, the daily said the International Court of Justice – better known as the World Court - is set to describe the barrier as an "infringement" on Palestinian rights.
"The construction of such a wall accordingly constitutes breaches by Israel of its various obligations under the applicable international humanitarian law and human rights instruments," Haaretz reported.
The World Court will deliver its ruling on Friday, but Israel has already said it would not accept its verdict.
Though Israel claims to build the barrier – a network of fences, ditches and walls across the occupied West Bank - to tighten security and stop bombers from sneaking in, Palestinians say it is a land grab.
Palestinians hope the court, the United Nation's highest legal authority, will say the barrier is illegal for Israel to build on land that it captured in the 1967 war. They hope this might in turn trigger a campaign for sanctions against Israel.
"We put tremendous faith in this court," Palestinian President Yasir Arafat said on Thursday.
Israel has already completed 200km of fences and walls that should eventually stretch for 730km.
The barrier has cut off thousands of Palestinians from farms, schools, relatives and jobs.
The UN General Assembly, where pro-Palestinian sentiment is strong, requested an urgent advisory opinion in December, and the court in The Hague held hearings in February. Its ruling is non-binding.
Last week, Israel's High Court ruled that sections of the barrier should be moved to ease Palestinian hardship and ensure access to farmland, schools and cities. But it also recognized Israel's security need to build inside the West Bank.