Serbia have been managed by caretaker coach Radovan Curcic since they failed to qualify for Euro 2012 after a poor campaign which led to the departure of Vladimir Petrovic.
"We have every intention of keeping our promise to name a new coach by the end of this month and the FSS believes Mihajlovic is by all means the right man for the job," Football Association president Tomislav Karadzic told Belgrade media.
"There are a few minor details to be sorted out, namely financial matters and Mihajlovic's assistants who are to be approved by the FSS executive board.
"We also spoke to a dozen or so Serbian first division coaches to get their opinions and they all supported the motion to name Mihajlovic, whom we have met with four times already in the past month to discuss his terms."
Mihajlovic was most recently coach of Serie A side Fiorentina but left in November after financial constraints led to poor form. He had previously bossed Bologna and Catania.
The 43-year-old was Roberto Mancini's assistant at Inter Milan from 2006-2008 after ending his career at the club, having also played for their Serie A rivals AS Roma, Sampdoria and Lazio.
He started his career as a midfielder at Serbian first division side Vojvodina Novi Sad in 1988 and won the European Cup with Red Star Belgrade in 1991 before he moved to Italy, where he played mostly as a central defender.
Lethal with his left foot from set pieces for club and country, Mihajlovic won two Italian league titles and four cups as well as the now defunct UEFA Cup Winners Cup with Lazio.
He played for Yugoslavia in the 1998 World Cup and Euro 2000, scoring nine goals in 63 international appearances