Mossad chief Yossi Cohen held talks with the Bahrain Prime Minister Khalifa bin Salman al-Khalifa three weeks ago, according to a report by Israeli Channel 12.
The channel's military correspondent, Nir Dafouri, hinted that Israel may entice the Bahrainis with arms deals in exchange for normalisation.
Israeli sources suggested that normalisation with Bahrain would be announced shortly after Israel and the UAE signed the formal declaration of their alliance in Washington, scheduled to take place next week.
They said normalisation may happen as soon as the end of September.
The channel reported that US officials are also mediating between Israel and Bahrain, noting that the senior advisor to the US president and son-in-law, Jared Kushner, met with the Bahraini king and his crown prince last week.
On Thursday, Bahrain allowed Israeli flights to-and-from the UAE to use its airspace, one day after Saudi Arabia approved a similar Emirati request.
In Manama, the Bahraini King Hamad bin Isa Al-Khalifa assured the US Secretary of State, Mike Pompeo, of his country's commitment to the 2002 Arab Peace Initiative, which demands the establishment of a Palestinian state in exchange for normalising relations with Israel.
US President Donald Trump announced last month that the UAE had normalised ties with Israel, only the third Arab state to do so.
Contacts between Bahrain - the first Gulf country to welcome the UAE-Israel deal - and Israel date back to the 1990s.
Bahrain, like most other Gulf countries, shares with Israel a common enemy in Iran, which Manama accuses of instigating protests by the nation's Shia Muslim majority against the ruling Sunni Al-Khalifa dynasty.
The UAE's decision to normalise ties with Israel has been welcomed by some Arab countries, but despite cheerleading from the US, others have rejected the idea and many approach it with caution.
The Palestinians have condemned the UAE deal as a stab in the back while they still lack a state of their own.
Secretary of State Mike Pompeo, who was on a Middle East visit last month, expressed optimism that more Arab nations will sign up to normalisation.