The former Olympian is said to have been very "matter-of-fact" as he made the shock revelation to his family, following months of speculation over his changing appearance.
The moment will reportedly be shown on a future episode of Keeping Up With The Kardashians.
A source told Us Weekly: "He literally started the conversation with, 'Hey, guys, I'm becoming a woman, but I'm sure you probably already figured that out'."
The star has undergone a complete transformation in recent months, following his split from Kris Jenner, growing his hair out and even having his Adam's Apple flattened.
"There was so much speculation, and they were all wondering about the truth," the source added. "Bruce had to address it with them."
It comes amid reports Bruce will open up about his sex change in a tell-all interview with Diane Sawyer, as well as filming his own docu-series about the decision.
"He got a little emotional, but it wasn't a jaw-dropping conversation,'" the source went on, adding: "It's a surprise to the girls that he's doing this at 65."
All of his daughters are said to have been very supportive of his decision.