Pettitte, 31, has not yet filed for free agency, meaning the Yankees will remain the only team able to negotiate with the pitcher until Monday. New York, however, has yet to make an offer at this point.
"He's come this far," Cashman told The Times. "He's going to go out and find out what his market is first. He's going to elect free agency."
The Houston Astros seem the most likely candidate to pursue Pettitte, who lives outside Houston, after the team relieved itself of $8 million in salary Monday when closer Billy Wagner was traded to the Philadelphia Phillies.
But Cashman, who had been silenced before Tuesday under a gag order imposed by principal owner George Steinbrenner, told The Times he was not concerned with the Astros' supposed interest in Pettitte.
"You expect to have a competition on your hands when a player of Andy's ability is available," Cashman said. "All you can do is what you feel is best. We'd love to keep Andy. We'll have our discussions, put our best foot forward and hope for the best. He's put himself in a great situation."
In the aftermath of the Yankees' six-game World Series loss to the Florida Marlins -- Pettitte was the Yankees' most dependable starter in the 2003 postseason, winning three times in five starts -- manager Joe Torre told the left-hander to do what was best for his family. Pettitte said he would call Torre, but has not done so.
"When he's ready to talk about it, we'll talk," Torre told The Times. "But I don't think there's any question everybody here wants him back."