According to L’Equipe, Pellistri is due to arrive in Lyon on Wednesday for his medical and contract signing.
Talks had stalled but the two sides made progress early this week and have now agreed a deal.
Lyon will pay slightly more than €5m for Pellistri, with a further €2m to follow in bonuses.
Penarol will also have a 40% sell-on clause in return for the fairly low transfer fee.
Pellistri, who has also been on Manchester City’s radar, will sign a five-year deal with OL.
Penarol asked Lyon to let the teenager stay until the end of the South American season in December.
Lyon refused this offer and intend to use Pellistri right away after a poor start (six points from five matches) to the new Ligue 1 season.
Paqueta loan bid
Lyon have also made an offer to sign AC Milan midfielder Lucas Paqueta on a season-long loan.
Their proposal included an €18m option to buy, but Milan were not convinced by it.
The Italian club want an obligation to buy and a few million more than what was offered by OL.
Talks will continue with Lyon hoping to secure the Brazilian before the end of the transfer window.
Paqueta, 23, was a costly investment for Milan, who paid €35m to Flamengo in January 2019.
However, he has failed to convince at the San Siro, leading to the Rossoneri making him available this summer.