Nigel Adkins’ side, who are three points clear of West Ham on top of the Championship table, have tabled a bid for Lee, according to Japanese sports newspaper Nikkan.
Other sources report the two sides have already come to a basic agreement, and that Lee will travel to England in early January to complete a physical and sign his contract.
Lee, who was born in Tokyo to Korean parents, scored 15 goals this season for Sanfrecce and the 26-year-old has made nine appearances for Japan.
With the club in financial trouble, many believe he will leave in January with clubs in Japan, France and Germany all said to be in pursuit.
Urawa Reds, in particular, hoped to attract the attacker after hiring former Sanfrecce coach Mihailo Petrovic.
The highlight of Lee’s international year was undoubtedly January’s Asian Cup final, when the late substitute skilfully volleyed a cross from Yuto Nagatomo to score the game’s lone goal against Australia.