He has told senior Trump administration staff about the company’s technology.
Until March Mr Luckey worked at Facebook, which paid $2bn (£1.55bn) for Oculus, the VR firm he founded.
He told the New York Times there was a need for a “new kind” of defence company using “superior technology” to protect troops and citizens.
The paper quoted insiders who said it planned to use sensors similar to those found on autonomous vehicles to monitor activity around fences and walls.
Smart software would be able to tell the difference between things that can be ignored, such as birds and other animals, and those, like drones, that demand attention.
Details about the new firm, including its name, are scant.
Former staff from Oculus who have also left the company are believed to have been recruited for the new start-up.
Tech news site The Verge speculated that the firm could either be linked to Mr Luckey’s support for Texas senator Ted Cruz, who has regularly called for improvements to border controls, or could be a smart business move.
In April, Mr Luckey hosted a fundraising event for Mr Cruz to help the politician’s efforts to be re-elected in 2018.
Mr Luckey is also known to have funded a pro-Trump online advocacy group and gave cash to help pay for President Trump’s inauguration ceremony.
Credit To BBC New