AP is reporting that CIA Director Leon Panetta will be named as the replacement for Robert Gates as Secretary of Defense. In turn, David Petraeus will be named as Panetta's replacement at CIA.
Such changes have been rumored for three weeks, as indicated in this WSJ report from April 8.
Further details as they develop.
Update: USA Today is also reporting that AP is reporting that Ryan Crocker, former Ambassador to Iraq, is the top candidate to become the next Ambassador to Afghanistan.
There has also been some discussion (sorry, no cites at this time) that a replacement for Admiral Mike Mullen as Chairman of the Joint Chiefs will also be announced. Although ABC News is now reporting that there will be no announcement on JCS tomorrow, when these nominations are expected to be officially announced.
Update 2: A few important questions to consider: How well will Panetta and Hillary Clinton work together? Will they collaborate effectively? Will there be conflict? If there is conflict, how good will National Security Advisor Tom Dinilon be at arbitrating those disputes? And what effect (if any) will this have on Clinton's expected departure from State following the 2012 elections?
Update 3: New York Times take on the story.