HITC Sport understands the Northern Ireland international is all set to link up with the League One outfit.
The 24-year-old was offered an opportunity to impress during pre-season by new Magpies boss Steve McClaren, but remains some way down the pecking order at St James’ Park.
He has also entered the final year of his current contract, so both sides have decided that a parting of ways is the best option at this juncture.
Ferguson has spent much of the last three seasons away from Newcastle, taking in two loan spells at Birmingham City and a stint at Rangers which was blighted by injury.
The decision to try and kick-start his career in League One has now been taken, with Millwall looking to regroup and kick on following their relegation out of the Championship.
Ferguson will also be hoping that the switch helps to keep his international fires burning, with Northern Ireland pushing hard for involvement at next summer’s European Championship in France.