Musonda has been made available by Chelsea, who are keen to see the winger go out and get regular first-team football.
The Belgian winger has played just 25 minutes of Premier League football this term, and Chelsea feel that he needs to go out elsewhere to develop.
Forest are now set to make an ambitious move for the wide-man, who also has interest from Premier League clubs.
Aitor Karanka is keen to enhance Forest’s attacking options, and feels he could offer Musonda regular first-team football.
The Reds have lacked a certain amount of creativity this season, and Karanka wants to find some better forward players to add to his group.
Musonda spent last season out on loan at Real Betis, where he made eight appearances in La Liga, setting up one goal.