The 28-year-old striker is leaving Portsmouth, where he has been on a month-to-month contract along with the rest of the squad.
A host of clubs have been tracking McLeod from the Championship and League One.
But Sky Sports understands that his former club MK Dons are in pole position to seal his signature.
The former Charlton, Derby and Barnet front-man spent three years with the club from 2004 to 2007, scoring 54 goals in 117 appearances.
MK boss Karl Robinson has now moved for McLeod to help bolster their promotion bid in a deal which is sure to be popular with the club's fans.