Daniel Cormier and Dominick Cruz react to Nate Diaz vs. Anthony Pettis fighting at UC 241. For more UFC, sign up for ESPN+ http://plus.espn.com/ufc. (1:47)

Cormier: Diaz vs. Pettis will bring more eyeballs to UFC 241 (1:47)

Nate Diaz's long-awaited, much-anticipated return to the UFC is on the verge of becoming a reality.

The UFC is working on finalizing a fight between Diaz and former lightweight champion Anthony Pettis at UFC 241 on Aug. 17, sources told ESPN on Saturday. The fight would be at 170 pounds.

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Both fighters have agreed to the bout and are expected to sign agreements soon, sources said.

Diaz (19-11), considered one of the most popular fighters in the UFC, hasn't fought since his UFC 202 loss to Conor McGregor in August 2016. He was slated to fight Dustin Poirier in November, but the fight fell through after Poirier withdrew because of an injury.

Pettis (22-8) was successful in his UFC welterweight debut in March when he knocked out Stephen Thompson.

A heavyweight title bout between champion Daniel Cormier and Stipe Miocic is scheduled to headline UFC 241, which will take place at the Honda Center in Anaheim, California.