According to multiple reports, the deal will pay Ellsbury $153 million over seven years. Although it was previously reported that the contract includes an option for an eighth year, sources now indicate that the option year has not yet been agreed to by both sides.
Ellsbury was on his way from his home in Arizona to New York on Tuesday night to take the physical, the source said.
With the projected addition of Ellsbury in center field, the Yankees would likely shift Brett Gardner to left field.
In recent days, the Yankees have become increasingly pessimistic that they will be able to retain second baseman Robinson Cano. Sources familiar with the negotiations between the Yankees and Cano told ESPNNewYork.com that the Yankees believe the Seattle Mariners might be willing to offer Cano $200 million over eight years. The Yankees have privately vowed not to go past $175 million for Cano.
It was not immediately clear whether the Yankees' pending investment in Ellsbury precludes them from bringing back Cano -- or even make a run at free-agent outfielder Shin-Soo Choo, who, like Ellsbury, is represented by agent Scott Boras.
Choo posted a .423 on-base percentage with the Cincinnati Reds in 2013, and he has reportedly attracted interest from the Yankees and several other clubs in the market for an outfield bat. But the Yankees have spent almost $240 million in guaranteed money on long-term deals for Ellsbury and catcher Brian McCann.
The Yankees still need to upgrade their rotation, and they will have to pay a steep price if they plan to pursue star Japanese free agent Masahiro Tanaka. So their allotment of cash has clearly diminished since the start of the offseason, when Cano was reportedly seeking a deal in excess of $300 million.
The Yankees have also held talks with Dan Lozano, the agent for outfielder Carlos Beltran. The Yankees like the idea of signing Beltran to a two-year deal, but with the Kansas City Royals reportedly willing to give Beltran $48 million over three years, a source with knowledge of the Yankees' thinking said the team had no plans to add a third year for the 36-year-old player.
Ellsbury, 30, would move from the World Series champion Boston Red Sox to the Yankees, joining a long list of players who have transitioned in the rivalry. In 2013, he hit .298 with a .781 OPS and led the American League with 52 stolen bases.
"Jacoby was a great player while he was with us," Red Sox chairman Tom Werner told ESPNBoston.com. "He helped us win two world championships, and he was a pleasure to watch offensively and defensively. I wish him the best."
Added Red Sox general manager Ben Cherington on Wednesday: "We would have loved to keep [Ellsbury], but we felt like there was a range we were willing to go to and the market got past that.''
Sources with knowledge of the team's thinking have repeatedly said that if Cano doesn't move on their offer, the Yankees will move on, and ensuing proposals could be for less than the $170 million over seven years they have put in front of Cano.
Information from ESPNNewYork.com's Andrew Marchand, ESPNNewYork.com's Wallace Matthews, ESPNBoston.com's Gordon Edes and ESPN.com's Buster Olney was used in this report.