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The two sides have been engaged in talks over the past week and are still ironing the details of McKenzie's role and his powers within the organization, the source said.
McKenzie has had the support of former Raiders executives Ron Wolf, Ken Herock and John Madden, who were assisting the team in its search for a new general manager.
"Reggie's a tremendous evaluator," Wolf told the Milwaukee Journal Sentinel on Wednesday. "He can tell you who can play and who can't play. That's what it's all about. Some can write reports but can't tell you who can play. Whatever that is, he has that. He has a feel."
McKenzie, who played linebacker for the Raiders from 1985-88, officially interviewed with the team Wednesday, a source told Schefter.
Owner Al Davis, who died in October, had effectively served as the team's general manager until his death.
Oakland gave up a 2012 first-round pick to get Palmer, leaving them with picks in just the fifth and sixth rounds of the 2012 draft until compensatory picks are doled out. The Raiders also are without a 2013 second-rounder because of the deal.
One Word: LEGEN- Wait for it, wait for it - DARY!!!!!!!!!!!