The Candystripes winger is expected to join the Championship side within days after impressing in several trials at the City Ground
The 22-year-old winger, who scored 17 goals for the Candystripes in the 2012 season, had recently impressed during a number of trials at the City Ground.
According to the Londonderry Sentinel, Forest have agreed a fee with Derry City in the region of £160,000 for the services of McLaughlin, who is set to sign a three-and-a-half year deal with the Championship club.
Following initial trials, former Forest manager Sean O'Driscoll hailed McLaughlin as a 'talented' player and the club are set sign the midfielder despite the appointment of new manager, Alex McLeish.
Donegal born McLaughlin began his senior career with Airtricity First Division side Finn Harps before joining FAI Cup winners Derry City in 2011.