He will begin his new role immediately, with the team holding a news conference Monday. Leafs vice president and general manager Dave Nonis will attend, suggesting his job is safe for now, despite another season in which the Leafs failed to make the playoffs. Shanahan will have a say about coach Randy Carlyle's future and potentially his replacement.
Shanahan leaves his job as NHL director of player safety after three years and will be replaced by Stephane Quintal.
News broke Wednesday that the Leafs had communicated interest in Shanahan for a potential job. A source told ESPN.com on Thursday that talks had intensified between the Leafs and Shanahan over the previous 48 hours and that, barring a last-minute hiccup, a deal would get done.
The Leafs were eliminated from postseason contention earlier this week, missing the playoffs for the eighth time in the past nine seasons.
Shanahan, 45, a Toronto native, was an eight-time All-Star and three-time Stanley Cup champion in 21 NHL seasons. He has worked in the league's head office since 2009. Shanahan was inducted into the Hockey Hall of Fame last year.
The Associated Press contributed to this report.