Clarke has already scored 18 goals for the Sky Blues this season, but the much-travelled player appears to be heading to League One rivals Wolves.
A statement on his club's official website read: "Coventry City football club can confirm that an agreement has been reached with Wolverhampton Wanderers for the transfer of Leon Clarke.
"The 28-year-old is now undergoing a medical with a view to completing a permanent move.
"No further comment will be made at this time."
The arrival of Clarke at Molineux could pave the way for Leigh Griffiths' move from Wolves to Celtic.
Griffiths has been heavily linked with a switch to the Scottish champions, who are expected to table a bid for the striker before the transfer window closes.
Clarke learned his trade at Wolves as a trainee and has since played for a variety of clubs including QPR, Sheffield Wednesday and Charlton.