The 51-year-old was finalising personal terms at the Sky Blues’ Ryton training base with chief executive Steve Waggott.
Mowbray’s initial contract, which he signed after replacing Steven Pressley in March, expired at the end of the season.
The former Celtic boss has been speaking to the club since the campaign ended, having guided them to safety in League One.
“We’re now in the stages of finalising personal terms with Tony and structuring the club’s framework for next season,” Waggott told the club’s official site.
“I’m aware that supporters are anxious for the discussions with Tony to be finalised but I’m hopeful of a more significant update towards the end of the week.”
Coventry finished 17th, five points above the bottom four with Mowbray winning five of his 14 games in charge.