AdAge claims users will be subjected to audible advertisements between songs as well as the traditional text ads that support many free offerings within the App Store.
The ads will apparently be targeted based on the user's listening habits, while other purchases made from iTunes or the App Store will also factor into which commercials folks see and hear while using the app.
The report doesn't mention whether Apple will be offering an ad-free subscription to iRadio, but does say the presence of ads will allow Apple to bring a free offering into play.
Regardless of how Apple manages the ad situation, it would be a major surprise if it didn't launch iRadio (or whatever the service is eventually called) at WWDC alongside iOS 7 next Monday.
The long-awaited app is expected to challenge the likes of Spotify, Pandora and Google Play Music All Access by offering personalised radio stations based on user preferences.
The report claims Apple won't allow users to search or select which individual tracks they wish to stream, as with Spotify Premium.
Instead, users be encouraged to download songs they enjoy from the iTunes Store.
Interestingly, the report claims any song purchases from within the app could instantly be synced back to iTunes Match for listening in the cloud wherever they roam.
AdAge's article also claims that, of the major record labels, Sony is the only one yet to agree a deal to allow music from its stable of artists to be licensed for Apple's radio service. However, both are said to remain optimistic the agreement will soon be in place.
What features would you like to see take centre stage within the iRadio app? Share your thoughts and predictions in the comments box.