ESPN's Chris Mortensen says, according to sources, the Nittany Lions plan to make the move official with an announcement Saturday.
Terms of the deal are unknown.
Earlier in the day, O'Briens agent told the Associated Press he was interviewing for the vacant Penn State head-coaching position.
Agent Joe Linta told The Associated Press that O'Brien was "flattered by the interest."
USA Today first reported that O'Brien was scheduled to interview, citing an unidentified person with knowledge of the situation.
In his first year coordinating the Patriots' high-scoring offense, O'Brien has also coached star quarterback Tom Brady since 2009. He spent 2008 coaching receivers.
O'Brien first joined New England in 2007 following 14 seasons on the collegiate level, including stops at Duke, Maryland and Georgia Tech. He played college football at Brown - Joe Paterno's alma mater.
Paterno was fired two months ago in the aftermath of child sex abuse charges against retired defensive coordinator Jerry Sandusky. Paterno, Division I's winningest coach with 409 victories, coached 46 seasons before trustees ousted him Nov. 9.
Penn State officials have termed the search "methodical and deliberate." Acting athletic director David Joyner has said he would like to give Paterno's replacement at least a few weeks to recruit before high school seniors can begin to announce their official intentions to attend college on Feb. 1.
Defensive coordinator Tom Bradley, who took over for Paterno on an interim basis, has also interviewed. Bradley was on the road recruiting Thursday.
Defensive line coach Larry Johnson has also received an interview. Two persons with knowledge of the coaching search also confirmed earlier reports that Paterno's son, quarterback coach Jay Paterno, has interviewed for the job. The persons requested anonymity because no one was authorized to speak about the search.
San Francisco 49ers offensive coordinator Greg Roman interviewed in November and his agent said this week he was on the "short list" for the job.
Among other rumored names, Tennessee Titans coach Mike Munchak has denied interest in the job three times since his former coach was fired. Green Bay quarterbacks coach Tom Clements has declined comment when asked if he was interested in the job and would not confirm a report that he had interviewed.
Associated Press writer Genaro C. Arms contributed to this report.
AP Sports Writer