Forest are looking for a new boss following the sacking of Billy Davies on March 24.
However, the 51-year-old has now revealed that he is back in discussions with the club where he spent 12 years as a player between 1985 and 1997.
"I'm still chatting with Nottingham Forest," he told talkSPORT. "That will continue. That's the best I can say at the moment.
"Forest have always been well supported whatever league they've been in, there's a rich history there. It's a great club and one that's very close to my heart."
Pearce has been out of management since 2012 when he stepped down as England's caretaker coach.