The 20-year-old is rated as one of the best young players outside the Premier League and he has had a host of top-flight and Championship clubs watching him in recent months.
Liverpool had tried to take him on trial - as HITC Sport revealed - but Oxford said no, but now they look set to sell.
HITC Sport understands that the two clubs are in talks and a deal is set to be confirmed in the coming days, with Derby keen to get the deal done before any rival bids can come in.
As part of the deal, Derby are understood to have agreed to let O'Dowda remain with Oxford for the rest of the season before joining The Rams in the summer.
Oxford-born O'Dowda has come through the youth ranks at the Kassam Stadium, playing in nearly 100 games for the club. He represents Ireland due to his families heritage and links with the Emerald Isle.