Malone, 42, most recently the lead assistant coach for the Golden State Warriors, would replace Keith Smart.
His contract with the Kings will include an option for a fourth year and will be worth more than $9 million over four years, the Bee reported,
Smart had a 48-93 record since he started early in the 2011-2012 season.
Malone is the first major hire under the team's new ownership, which is led by Vivek Ranadive, the report said.
Ranadive's group purchased the team from the Maloof family. The NBA approved the sale Tuesday.
The team is still searching for a new general manager.