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Toulon are expected to announce the capture of the Hurricanes finisher from next season.
RMC Sport news reported the 27-year-old has penned a three-year deal with Toulon that will be formally announced by president Mourad Boudjellal on Friday (NZT).
Milner-Skudder has endured a horror run of injuries, including two shoulder surgeries and a broken bone in his foot, since bursting onto the scene and starring for the All Blacks at the 2015 World Cup.
Post that tournament, where he was named breakthrough player of the year, the fleet-footed fullback and wing utility has been restricted to five tests after battling to recapture the hot-stepping form that made him an instant fan favourite.
At this stage, Milner-Skudder is expected to feature for the Hurricanes next year and, unless needed for the World Cup, he would then likely be granted a release from provincial duties to commence his contract with Toulon in September.
Competition for places is no fiercer than in the All Blacks' back three where Ben Smith, Jordie Barrett, Rieko Ioane, Damian McKenzie and Waisake Naholo were preferred for the northern tour.
Of that contingent, Naholo is believed to be at risk of losing his place for the World Cup.
Given Milner-Skudder's on-going injury battles – he returned home from the last of his 13 tests in Japan on November 3 with another shoulder issue which saw him miss the New Zealand Maori tour – cashing in on a lucrative contract abroad would make sense.
At Toulon, Milner-Skudder would join former All Blacks and Hurricanes wing Julian Savea as well as Liam Messam and Malakai Fekitoa, though the latter has been linked with a move to Wasps next season.