The Portugese coach will take over from Pierre Sage, who was dismissed from the Lyon hotseat. "Barring the unexpected, yes, Paulo is going to be our next coach," said Lyon owner John Textor.
"He has a little bit of work to tie things up with his former club. That's happening very quickly. We expect to see him there this week. We expect to announce him this week as our new coach," the American added.
Fonseca, 51, has been out of work since leaving AC Milan in December after only joining the Italian giants in the close season. Lyon currently sit sixth in Ligue 1, four points from UCL spots.
"I think right now, we need some structure. We need some discipline," said businessman Textor. " I think experience matters in this case, and I think Paulo has it, not only in other leagues, but in this league," he added.