The longtime NFL star was released by the Indianapolis Colts March 7 after missing the entire 2011 season because of a series of neck injuries. Manning visited with several teams and decided on the Broncos, NFL.com and ESPN reported.
The Denver Post said the deal between Manning and the Broncos would likely be for about $90 million over five years.
NFL.com said the Broncos were looking for a team that might take current quarterback Tim Tebow in a trade.
Broncos Executive Vice President John Elway, himself a Pro Football Hall of Fame quarterback, was among team officials who met with Manning last week in North Carolina.
"We enjoyed visiting with Peyton today [Friday] in N.C.," Elway filed via Twitter.
"Watching him throw today was the next step in this important process for our team and Peyton. It was a productive visit and went well."
Manning was reported to have considered the San Francisco 49ers and Tennessee Titans along with the Broncos. Other teams that expressed interest in Manning included the Arizona Cardinals and Miami Dolphins.
Manning, who turns 36 Saturday, started every game for the Colts, who drafted him as the No. 1 overall selection in 1998, for 13 seasons. He was selected for the Pro Bowl 11 times and led Indianapolis to the championship in Super Bowl XLI.