The 31-year-old was let go by the club earlier today - just four days before the start of the new season - in what director of football Craig Levein described as a 'very difficult' and 'reluctant' decision.
According to the Birmingham Mail, Cathro is set to land on his feet by joining Nuno Espirito Santo's side as an assistant, with an announcement expected "shortly".
Cathro previously worked under Nuno at Rio Avenue and Valencia before departing to become Steve McClaren's assistant at Newcastle United in 2015.
A report in the Scottish Sun claims that Cathro has already spent two days with Nuno at Molineux - while still technically Hearts boss - in order to advise on recruitment.
Wolves have been one of the most prolific sides in English football in this summer's transfer market, bringing in 11 senior players to date.