"His contract is being finalised," the country's cricket board said in a statement on Friday. "It is expected Mickey Arthur will join the PCB towards the end of this month."
Coaching Pakistan, traditionally a fractious bunch of talented individuals, is one of the toughest jobs in international cricket and Waqar stepped down last month after the team's poor World Twenty20 display in India.
Former captain Inzamam-ul-Haq was also appointed as new chief selector in April.
The 47-year-old Arthur coached his native South Africa from 2005-10 and also led Australia for two years from 2011.
Pakistan rose to number two in the test rankings last year after series wins in Sri Lanka, Bangladesh and by beating England in the United Arab Emirates in November.
However, they started 2016 with defeats in the 50-over and T20 series in New Zealand and went out of the World T20 on the back of three group stage defeats.
Those results prompted former fast bowler Waqar to resign and also saw all-rounder Shahid Afridi lose the T20 captaincy. The selection committee was also dissolved by the Pakistan Cricket Board.
(Reporting by Sudipto Ganguly in Mumbai; Editing by Tony Jimenez)
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