The deal is reported to pay Sanders an annual salary of $10 million or more.
Members of Sanders' 2010 draft class have until Oct. 31 to sign contract extensions, and the negotiations are said to be in the final stages.
He averaged 9.8 points, 9.5 rebounds and 2.8 blocks, which was second in the NBA, in 27 minutes per game last season. He finished seventh in NBA Defensive Player of the Year voting.
SI.COM: Eastern Conference roundtable: Taking stock of the offseason The team is in rebuilding mode, having acquired Brandon Knight last week from Detroit in exchange for Brandon Jennings.