The person spoke to the AP on condition of anonymity Tuesday because the agreement was subject to a successful physical and had not been announced. Machado can opt out after five years and become a free agent again, the person said.
Machado's deal, if completed, would be the second-largest in baseball history behind Giancarlo Stanton's $325 million, 13-year deal signed with the Miami Marlins ahead of the 2015 season.
Speaking at spring training in Peoria, Arizona, Padres executive chairman Ron Fowler said: "We do not have a deal with any free agent player. We are continuing discussions, and that's all we have to say."
Teams draw a distinction between an agreement subject to a physical and a finalized deal.
San Diego is making a stunning move early in spring training for the second straight year after reaching a $144 million, seven-year contract last February with first baseman Eric Hosmer. The Padres, who have been rebuilding with prospects, have not had a winning season since 2010, and haven't been to the playoffs since 2006 and have never won the World Series.
Machado is expected to fill the team's gaping need at third base. He began last year with Baltimore, was traded to the Los Angeles Dodgers after the All-Star break and struck out to end the World Series loss to Boston.