The Liz & Dick star is currently facing a probation violation in her jewellery theft case for allegedly lying to police about being behind the wheel during a June 2012 car crash.
Lohan could face a return to jail, especially if police can prove she had been drinking alcohol just prior to the automobile accident.
A new report from TMZ cites sources claiming that Lohan's lawyers and the Santa Monica City Attorney are working on a plea deal that will spare the actress any time in jail.
Lohan would be required to spend 60 days in a rehab centre under the terms of the reported deal, in addition to attending a number of AA classes.
The Mean Girls actress would also apparently be required to do community service and would be allowed to carry out those hours in her new home of New York.
The Los Angeles City Attorney would likely also have to approve the plea since it has jurisdiction over her theft case.
Lohan is also facing a possible separate criminal charge for a scuffle with another woman at a New York nightclub late last year.