Due to launch on Wednesday, the agency will publish news from the outside world for Second Life members and news of Second Life for real world readers who visit the Reuters virtual news site.
Reuters News Centre, a mobile device that users can carry inside the virtual environment, allows charcters to stay tuned to the latest headlines.
Adam Pasick, a media correspondent with the agency based in London, will serve as the news organisation's first virtual bureau chief, using an avatar - an animated character - called 'Adam Reuters'.
"As strange as it might seem, it's not that different from being a reporter in the real world," Mr Pasick told Reuters.
"Once you get used to it, it becomes very much like the job I have been doing for years."
Second Life is a simulated 3D world, created by Linden Lab in San Francisco, where characters can go about their daily business using a virtual currency - Linden Dollars - to shop, work, and generally hang about.
According to Reuters, nearly a million people are members of the community with players spending nearly £7 million a year in the virtual world.
Linden Dollars can be converted into US dollars at the online marketplace so that players can make real money from their virtual counterparts.
Several large companies, including Toyota, Sony BMG, Sun Microsystems, have operations in the virtual world. Clothing firms Adidas and American Apparel even sell clothes in which avatars can be dressed.
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