On August 1, Fisher-Price, a Mattel division, issued a worldwide recall of 1.5 million pre-school toys featuring characters such as Dora the Explorer, Big Bird and Elmo.
Company officials questioned last week attributed the recalls to design problems.
Until now, Fisher-Price and Mattel had never recalled toys because of lead paint.
The Consumer Product Safety Commission declined to comment on the latest recall.
Mattel's expected announcement would mark the latest in a string of toy recalls that have rocked the toy industry as it prepares for the crucial holiday season.
With more than 80 per cent of toys sold worldwide made in China, toy sellers are nervous that shoppers will shy away from their products.
In June, toy maker RC2 voluntarily recalled 1.5 million wooden railway toys and parts from its Thomas & Friends Wooden Railway product line.
The company said the surface paint on certain toys and parts made in China between January 2005 and April 2006 contained lead, affecting 26 components and 23 retailers.
In July, Hasbro recalled Chinese-made Easy Bake ovens, marking the second time the toy had been recalled this year.
China, hit by a series of product safety problems, fears the loss of consumer confidence in the made-in-China brand, and says recalls could stoke trade protectionism.
The government has been sending the message that it is serious in cracking down on errant manufacturers.