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 The person says the team is negotiating a contract with McHale. The person spoke Friday on condition of anonymity because the deal is not yet complete.
McHale would take over for Rick Adelman, who left the team days after his fourth season in Houston.
McHale, a Hall of Fame player for the Boston Celtics, spent 15 years with the Timberwolves in his native Minnesota. He was let go in 2009 and has recently served as a TV analyst.
The 53-year-old McHale would become Houston's third coach since 2003, when Rudy Tomjanovich stepped down for health reasons. Jeff Van Gundy coached the team from 2003-07, taking the Rockets to three playoff appearances.
Houston has missed the playoffs the last two years as it dealt with injuries that have limited All-Star center Yao Ming to just five games since the 2008-09 season. That year, Houston reached the Western Conference semifinals, breaking a streak of seven consecutive first-round exits for the franchise.
Yao's contract expires this summer, but he has said he hopes to continue playing for the Rockets when he recovers from the stress fracture to his left ankle.
McHale's time as an executive in Minnesota was highlighted by drafting Kevin Garnett out of high school in 1995. Other moves and draft decisions didn't go over as well with fans and he began to draw criticism.
McHale's first coaching experience came when he took over the Wolves for the last 31 games of the 2005 season after he fired Flip Saunders. He went back to the front office after that before returning to the position in 2008 after Randy Wittman was fired.
He went 20-43 after taking over that season before the Timberwolves let him go.
McHale was the third overall pick in the 1980 draft, won three championships with the Celtics and was named one of the 50 greatest NBA players of all time in 1996.
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