A deal is not complete at this time, but Trotz is the front-runner for the job, according to the source.
After 15 seasons as head coach, Trotz parted ways with the Predators in April after the team missed the playoffs for the second consecutive season.
The Capitals cleaned house in April, firing general manager George McPhee and coach Adam Oates after the team failed to make the playoffs for the first time since 2007.
"We were left with the overall impression that the team wasn't trending toward being able to compete for a Stanley Cup," Capitals owner Ted Leonsis said when the firings were announced last month. "And that was just a clear signal and why it was time to make those changes."
Trotz is no stranger to the Capitals. He served as a part-time scout for the organization in 1987, and joined it full time as its chief western scout in 1988.
He was named head coach of the Baltimore Bandits, the Capitals' AHL affiliate, in 1992. When the Skipjacks relocated to Portland, Maine, and became the Portland Pirates, he led them to two Calder Cup Finals appearances in four seasons and a championship in the 1994-95 season.