A search of the Arade dam will begin on Tuesday, 50km from where the toddler went missing in Praia da Luz in 2007.
Christian Brueckner, 45, was made a formal suspect, or an "arguido", by Portuguese prosecutors in 2022.
The search was requested by German police as the area was visited by Brueckner when Madeleine, then three years old, disappeared.
Madeleine, from Rothley, Leicestershire, had been on holiday with her family in Portugal's Algarve when she went missing on 3 May 2007.
Portuguese police said in a press statement that it is co-ordinating searches in the Algarve over the next few days, with British officers also present.
Hans Christian Wolters, German state prosecutor in Braunschweig, told the BBC a short statement of confirmation would be released by the German authorities on Tuesday morning.
An area of the reservoir's peninsula just over a mile long was sealed off by police shortly after midday on Monday, Portuguese television network SIC reported.
The search is expected to take place on Tuesday and Wednesday, it said.
Police have erected blue tents and are closing off roads leading to the man-made dam, while a total of 20 police officers have been assigned to the search.
Mr Wolters is treating Brueckner as the main suspect in the McCann case, although he has never been charged over Madeleine's disappearance and has denied any involvement.
The state prosecutor said a growing amount of evidence had connected Brueckner to the case, including his mobile phone records showing he was in the Praia de Luz area at the time of Madeleine's disappearance.
Brueckner, a German national, is currently in prison in Germany for the rape of a 72-year-old woman in 2005 in the same area where Madeleine McCann went missing.
He was living near the Praia da Luz resort when the McCann family was on holiday, and spent time in the area between 2000 and 2017.
It is not the first time the reservoir has been searched as part of the investigation.
In 2008, Portuguese lawyer Marcos Aragao Correia paid for specialist divers to check the waterway after he claimed to have been tipped off by criminal contacts that Madeleine's body was in the reservoir.
The most recent search in Portugal in relation to Madeleine's disappearance was in 2014, when British police were given permission to examine scrubland near where she vanished.
Earlier this month, Madeleine's parents, Kate and Gerry, held a vigil to mark the 16th anniversary of her disappearance.
They also marked their daughter's 20th birthday in May, vowing to "never give up" on finding their daughter.
"Happy birthday Madeleine. Still missing. Still very much missed. Still looking. For as long as it takes," they said in a post on the official Facebook page of the Find Madeleine Campaign.
"We love you and we're waiting for you. We're never going to give up."