Security experts said the passwords are circulating in the form of a cryptographic "hash", which converts text into a seemingly random string of numbers and letters using a mathematical formula, the Telegraph reported.
It means anyone wishing to use the passwords would need technical expertise and time to recover their original characters.
Users were warned by experts to change their passwords as soon as possible.
"It would seem sensible to suggest to LinkedIn users that they change their passwords as soon as possible as a precautionary step," said Graham Cluley of British internet security firm Sophos.
Users who have the same password on LinkedIn as on other websites were also warned to change it elsewhere.
LinkedIn, which reportedly has more than 150 million users who use it to form professional connections and post their resume online, made no comment except to say it was investigating the claims.