Palermo are reportedly set to unveil Francesco Guidolin as their new coach.
The Serie A side are looking to build on an encouraging season and are believed to be closing in on the Monaco coach.
Guidolin is widely expected to be replaced in the Principality this summer and would therefore be free to take over from Giuseppe Papadopulo at Palermo.
"Guidolin back to Palermo? I think yes," president Maurizio Zamparini told the Italian press.
Papadopulo is contracted to the club for another year, and admitted that he was surprised to hear the rumours.
"The president and I are continuing to talk in a normal way," he insisted.
"I feel in an absurd situation and I think that if a new manager was announced, it would surprise a lot of people.
"But I honestly don't know what to think. If I am let go it would be a really bad professional blow for me."
Meanwhile, Palermo have brought Ascoli midfielder Roberto Guana and out-of-contract goalkeeper in to strengthen their ranks.
25-year-old Guana was a key player for Ascoli last season and will add depth to their squad.
Fontana joins on a free transfer following his release from Chievo at the end of the season.
Fabio Grosso is expected to be sold to Internazionale within the next few days though.
"We met with Palermo and are really close to agreeing a deal for Grosso," confirmed Nerazzurri technical director Marco Branca.