According to the New York Times, the deal is thought to be worth around $30m per movie over an unspecified period of years to the animation studio, which is responsible for a number of blockbusters including Shrek and Madagascar.
Chief executive of DreamWorks, Jeffrey Katzenberg, said: 'This is a game-changing deal'.
Ted Sarandos, Netflix's chief content officer, added: 'You're seeing power moving back into the hands of content creators.'
Sarandos also said when a company like DreamWorks ends a long-running pay TV deal, referring to Netflix's existing deal with US TV broadcaster HBO, 'that's a really interesting landscape shift'.
The deal, which according to the pair is the first-time a film company has opted to web-streaming over pay-for TV as a way to offer viewers their movies, will commence in 2013.
Netflix is currently only available to web users in the US. However, earlier this year, Variety claimed sources close to European film distributors believe the film-streaming service is planning an assault on both the UK and Spanish markets in early 2012. Netflix has declined to comment on the rumours.