Steve Bruce has identified the Uruguay international as his preferred replacement for the departed Shane Long, after a move for Jordan Rhodes fell through.
The Tigers are willing to pay 12 million euros for the Uruguay international as Steve Bruce seeks to fill the attacking void left by Shane Long, who joined Southampton in a €15.9 million deal earlier this month.
Hernandez has previously been linked with Sunderland and recently snubbed the chance to join Portuguese giant Benfica, but is now set for a move to the KC Stadium.
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Hull was keen on signing Blackburn striker Jordan Rhodes, but talks broke down over Rovers' valuation of their star man.
"Jordan Rhodes is not going to happen," Bruce told reporters earlier this week. "It is disappointing for everyone concerned, but even more disappointing for someone like Jordan. We are close to one or two things and are very close to one in particular, which would be a fantastic addition for us if we can pull it off. Until it is rubber stamped I don't want to say any more. The deal for Jordan is dead and buried, though.
"We got an indication from Blackburn they were willing to do a deal. That obviously changed within 24 hours and that is their prerogative. If they had said at the start that is what they wanted to do we would have walked away, but it got protracted. We thought we were close, then it changed and he wasn't for sale."
Hernandez, who scored 14 goals last season as Palermo won promotion back to Serie A, is now due on Humberside where he is expected to sign a four-year contract.