The official spoke to The Associated Press on condition of anonymity because he was not authorized to discuss the matter.
The official said "contacts have been made" and it is "probable" the Hall of Fame coach and Panathinaikos, the reigning Greek champion, will reach an agreement.
The 66-year-old Pitino was fired by Louisville a year ago after the school was implicated in a U.S. federal corruption investigation of college basketball.
Panathinaikos fired coach Xavi Pascual on Thursday following a fifth loss in seven games in the Euroleague, Europe's main club competition.
Panathinaikos' players include former Florida standout and Memphis Grizzlies player Nick Calathes, former NBA lottery pick Georgios Papagiannis and former Knicks player Thanasis Antetokounmpo, the older brother of Milwaukee Bucks star Giannis Antetokounmpo.
The hiring would mark a stunning turn for Pitino, who was fired by Louisville in October 2017 following the school's acknowledgment it was involved in the federal inquiry.
Pitino was not mentioned in the complaint and has maintained he was not aware of a scheme to pay the family of former Cardinals recruit Brian Bowen to play for Louisville. The immediate fallout from that scandal — soon after a sex scandal that resulted in the program vacating its 2013 NCAA title— ultimately cost him his job after 16 seasons.
While Pitino expressed a desire to remain involved in basketball, he said in September he was likely done with coaching despite feeling "physically very young and mentally very young."
"I think my time has passed, I really do," Pitino told the AP during a tour for his book "Pitino: My Story," which told his side of the events leading to his ouster.
AP Sports Writer Gary B. Graves in Louisville, Kentucky, contributed to this report.