Sources told ESPN.com that Casspi and the Kings are finalizing a two-year, $6 million deal to keep the first Israeli in NBA history with the franchise that drafted him and reacquired him last summer.
Casspi flourished in the second half of last season under new Kings coach George Karl and joins Rajon Rondo, Marco Belinelli and Kosta Koufos as players to strike free-agent agreements with Sacramento.
The 2014-15 season marked Casspi's second tour of duty with Sacramento, which previously had selected him in the first round of the 2009 draft.
He signed a one-year contract with Sacramento and flourished, especially after Karl took over in February.
The 27-year-old drew big minutes at small forward down the stretch, and averaged 19.9 points, 5.8 rebounds and 2.9 assists in the season's final month. The 6-foot-9 Casspi is a strong shooter from long range (40.2 percent in 2014-15).
An unrestricted free agent, Casspi indicated in April his desire was to remain with the Kings.
"I love it here. I want to come back. My agent knows that, I know that, I love it here," Casspi said.