The City Football Group (CFG)-aligned club will announce Postecoglou as coach on Tuesday, fulfilling his ambitions to return to club football after steering Australia to next year's FIFA World Cup in Russia.

Postecoglou will link up with Socceroos defender Milos Degenek, who told The World Game last week that he was "excited" by the prospect.

He will reportedly spend time shadowing Manchester City coach Pep Guardiola in January before taking the reins at Yokahama in time for the J.League season, which begins in late February.

Even while contracted as Socceroos coach, Postecoglou made no secret of his desires to return to club football at the end of his FFA contract.

He had hoped that club would be in Europe, but CFG's ambitious plans in Japan and links to flagship club Manchester City have persuaded Postecoglou to defer his plans to return to the continent.

The trail-blazing coach was previously linked to cashed-up Shanghai Shenhua of the dubious-quality Chinese Super League.

There are no such qualms of the competition across the East China Sea in the J.League, which is seen as the best national league in Asia.

Yokohama are a faded powerhouse of the competition though, with the last of their five titles coming in 2004.

The job will be Postecoglou's second stint overseas after coaching Panachaiki, a Greek third-division club, a decade ago.

He will become the first Australian to coach in the J.League since Graham Arnold - the man most likely to replace him as Socceroos coach - had an ill-fated spell in charge of Vegalta Sendai ending in April 2014.

While Postecoglou will oversee Degenek at Yokohama, it's likely the parochial Australian will also look at other national team talent to bolster his squad for the 2018 season.

He replaces Erick Mombaerts as coach, with the Frenchman's contract not being renewed after a fifth-placed finish in 2017.

Mombaerts remains at the club to the end of the Japanese knock-out competition, the Emperor's Cup, with the club playing a semi-final against Kashiwa Reysol on Saturday.

Should Yokohama win the final on New Year's Day they will reach the AFC Champions League, which could see Postecoglou coach against A-League entries Sydney FC or Melbourne Victory later in 2018.