The deal is worth $1.9 million according to the source. The Raptors will use what is termed their bi-annual exception to sign Nesterovic.
The 33-year-old center played for the Raptors from 2006-2008 before being traded to the Pacers last season in the Jermaine O'Neal trade. Nesterovic helps shore up the Raptors in the middle and he's expected to come off the bench behind Andrea Bargnani.
Chad Ford is a senior NBA writer for ESPN.com.