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The 37-year-old will pen a one-year contract at Leicester this afternoon provided that there no problems with his medical examination.
The signing of Keown, an ex-England international who was released by Arsenal at the end of last season, represents something of a coup for promotion-chasing Leicester.
Manager Micky Adams admitted he had to fend off the advances of a number of clubs to sign the Oxford-based defender.
"We have beaten off a lot of competition from other clubs to secure Martin's signature," revealed Adams, speaking to the club's official site.
"We have agreed terms and the player will undergo a medical later today.
"Martin Keown is a leader. I felt that it was important for us to bring a player with that quality to the club after we received the news that Matt Elliott is going to be out for up to 12 weeks following his knee operation."
Reports at the weekend had suggested that Keown was set to sign for Reading. However, Reading MAD yesterday revealed that there was "no chance" of the veteran joining the Royals, allowing Leicester to pounce.
Leicester, who were relegated from the Premiership at the end of last season, are hoping to jump back up at the first attempt.