Boro have called a press conference for 10.30am on Wednesday at which they are expected to confirm Karanka as the club's first foreign manager.
The Teesside outfit have been without a permanent boss since Tony Mowbray's departure last month and chairman Steve Gibson looks to have decided on the Spaniard to lead the club's next chapter.
Both Middlesbrough and Crystal Palace had shown an interest in Karanka, but he has now decided on a deal with the Championship club after he flew to England on Monday with his agent Jorge Mendes.
Karanka is currently out of work after leaving Real Madrid in the summer, following Jose Mourinho's move to Chelsea.
Mourinho did not take Karanka with him to Stamford Bridge, but he is full of praise for his former assistant, saying recently: "I know him very, very well.
"I think the club that gets him, whether in England or another country, will be lucky."
Mowbray's assistant Mark Venus had been in caretaker charge of the club for the last three games, but the win, draw and loss have seemingly not been enough to convince Gibson to give him the role on a permanent basis.
Karanka's agents confirmed to Sky Sports earlier this week that he was in talks with a foreign club.