The deal for Mills is worth up to $5 million to return to the Philadelphia Eagles, agent Drew Rosenhaus told ESPN's Adam Schefter.
Mills will be moving from cornerback to safety, a source told ESPN's Josina Anderson.
Mills, who turns 26 on April 6, has been a favorite of defensive coordinator Jim Schwartz since the Eagles selected him in the seventh round of the 2016 NFL draft. Schwartz values sound-tackling corners with unshakable confidence and a mean competitive streak, and Mills has all of that.
He is at his best in the red zone and has been part of some key sequences in Eagles history, including the incompletion intended for Julio Jones to seal Philadelphia's divisional-round playoff win over the Atlanta Falcons in 2017 en route to the team's first Super Bowl title.
Mills lacks elite recovery speed, however, which has factored into the Eagles' susceptibility to the deep ball in recent seasons. Mills missed the second half of the 2018 campaign and the beginning of this past season with a foot injury.
He has four interceptions and 37 passes defensed in four seasons.
The versatile McLeod, who was moved all over the field by Schwartz, formed an effective safety tandem with Malcolm Jenkins over the past four seasons. On Tuesday, the Eagles said they would not pick up the 2020 club option on Jenkins.
After suffering a torn ACL that limited him to just three games in 2018, McLeod returned to play all 16 games this past season and finished with 2 interceptions, 2 forced fumbles and 76 tackles.
McLeod, who turns 30 on June 23, tied a personal best in 2017 with three interceptions to go with 54 tackles and six passes defensed as he and Jenkins helped orchestrate a defense that finished in the top five in points against (18.4) and takeaways (31) en route to winning the Super Bowl.
Signed as an undrafted free agent in 2012, McLeod started 48 games over four seasons with the Rams before signing a five-year, $35 million deal with the Eagles in free agency in '16.
For his career, McLeod is credited with 468 tackles, 2 sacks, 13 interceptions and 12 forced fumbles.
ESPN's Tim McManus contributed to this report.