Derry will work alongside former Carlisle boss Greg Abbott at Meadow Lane, although it remains unclear whether he will be the man in charge or the assistant to the more experienced Abbott.
Former Magpies midfielder Derry will return to the club where his professional career began to take his first step in management.
The 35-year-old, who was part of County's Division Three title-winning team in 1998, is still under contract as a player at QPR until next summer and was on loan at Rangers' Sky Bet Championship rivals Millwall, where he was scheduled to remain until January 1, 2014.
Both London clubs have refused to stand in the way of Derry's opportunity to test himself in management and the severence package from QPR is expected to be concluded on Wednesday.
Abbott, a close friend of Derry from their time together at Leeds, will make a swift return to the dugout just two months after losing his job at Carlisle.
The 49-year-old was in charge at Brunton Park for almost five years and guided the club to Johnstone's Paint Trophy success in 2011.
The duo replace Chris Kiwomya who left Notts County by mutual consent on October 27 after 10 defeats in 13 League One matches left the Magpies bottom of the table.
Development manager Steve Hodge has overseen a home victory against Oldham and an away defeat to Coventry in his two games as caretaker manager since Kiwomya's departure