Sources told ESPN.com that the Rockets and Nuggets have agreed to a trade that will land Lawson in the ever-competitive Southwest Division for a package of non-guaranteed contracts and a 2016 protected first-round pick.
The Nuggets, sources say, will acquire the non-guaranteed contract of forward Kostas Papanikolaou and the partially guaranteed contract of veteran guard Pablo Prigioni along with Joey Dorsey, Nick Johnson and the future first-round pick.
Sources say Denver will also send a 2017 second-round pick to Houston with Lawson, who is currently in rehab in Los Angeles after his second DUI arrest in 2015.
Sources told ESPN.com that although the trade is unlikely to be formally completed before Monday, Lawson was notified Sunday evening that he's on his way to Houston.
Lawson, 27, was arrested Tuesday in Los Angeles on suspicion of driving under the influence. He also was arrested and charged with DUI in Denver in January.
Lawson's next court appearance in Denver was set for Aug. 20.
Information from The Associated Press was used in this report.