The motorsport.com website reported multiple sources "with good knowledge of the situation" indicating that Lowe, who has helped Mercedes win three successive constructors' titles, was set to join rivals Williams.
Mercedes, who were rocked by Rosberg's retirement announcement only five days after he won the title at the end of last month in Abu Dhabi, had no comment on rumours about Lowe that have been rife since September.
Williams, who use Mercedes engines and whose Finnish driver Valtteri Bottas has become the bookmakers' favourite to replace Rosberg alongside triple world champion Lewis Hamilton next season, also had no comment.
The BBC reported, without giving a source, that Williams had rejected a Mercedes proposal to slash the price of the team's engines in exchange for releasing the 27-year-old Finn but negotiations were expected to continue.
Lowe started his F1 career with former world champions Williams in 1987, and spent six years there. The team finished fifth overall this year.
Williams current technical head Pat Symonds is 63 and told Reuters in a recent interview that he would still be at the team next year, while also indicating that he was looking to reduce his workload.
