The person spoke Thursday on the condition of anonymity because the team does not publicly discuss its player personnel plans.
No timetable was provided as to when Williams will be cut, but the person said the team's top pass-rushing threat will be playing his final game for Buffalo on Sunday, when the Bills (7-8) close the season hosting the New York Jets (10-5).
Williams declined comment about the report when approached by ESPN's Mike Rodak.
Williams has become expendable because his contract is deemed to be too expensive, and also because he has struggled to make the transition to the defensive system introduced by first-year coach Rex Ryan. Williams has two years left on the six-year, $100 million contract he signed in free agency in 2012.
Ryan denied knowledge of the report.
"Well, I don't know where it's coming from or whatever," Ryan said. "I know we have a game to play and that's really where all of our focus is. So I don't know where the story is coming from."
Ryan also deferred when asked how Williams fits into the Bills' defense long term.
"Well I'm not gonna get into speculating on this player's gonna be here or not here, how they fit in or whatever," Ryan said. "I think those discussions, all those type of discussions, will be better served after this game."
Williams is set make an $11.5 million base salary next year. By cutting him, the Bills would save more than $12 million under the salary cap.
The savings are important for a team that needs to free up room to re-sign and add players in free agency this offseason.
At the same time, the person said veteran defensive tackle Kyle Williams' job is safe, so long as he recovers from a season-ending left knee injury he sustained in a 34-21 loss to Cincinnati on Oct. 18.
Kyle Williams is a 10-year veteran and a four-time Pro Bowl selection. The Bills value him because of his play and because of the leadership role he provides.
His future in Buffalo had been in question only because of his salary. He is scheduled to make $12.3 million in base salary over the final two years of his contract.
The Bills intend to revamp their defensive personnel after the unit underperformed this season.
Buffalo ranks 20th in yards allowed and 31st in sacks. That's a major disappointment for a defense that returned mostly intact a year after finishing fourth in yards allowed and had an NFL-leading 54 sacks.
Mario Williams' drop-off has been significant. He has just four sacks in 14 games this season.
The NFL's top pick in the 2006 emerged as one of the league's top pass-rushing threats during his first six seasons in Houston. Williams has 96 career sacks and combined for 38 in his first three seasons in Buffalo, including a career-best 14½ last year.
Williams has also publicly voiced his frustrations over how he's being used in Ryan's system. He has questioned why he's been asked to drop back into coverage on occasion, something Williams said he's never done in his previous 10 seasons.
Last week, Williams included himself when saying he wasn't sure whether the Bills personnel match what Ryan wants to do.
Williams stressed he wasn't criticizing Ryan, but just simply stating a fact.
On Wednesday, speaking on a conference call, Ryan declined to reveal who he was referring to in saying players haven't bought into his scheme.
Ryan added he's been bothered by criticism coming from his players.
"Yeah it bothers me, no doubt about it," Ryan said. "Now, I haven't said anything public until now about it. But sure, that would bother me. Doesn't mean I'm going to change who I am or how I go about my business, I can promise you that."
Williams signed with the Bills in March 2012 after spending three days in town negotiating what at that time became the most expensive contract signed by a defensive player.
Williams is no longer the Bills' most high-priced player after the team signed defensive tackle Marcell Dareus to a six-year, $108 million contract in September.
Information from ESPN's Mike Rodak and The Associated Press was used in this report.