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Jacobs, who recently completed two terms as mayor of Knox County, is considered the frontrunner for the appointment, according to The Washington Sun, which cited multiple Republican operatives and people familiar with the discussions.
Independent reporting has also identified Jacobs as one of the leading contenders for the seat.
Blackburn is expected to vacate her Senate seat when she takes office as governor in January.
She has previously indicated that she intends to appoint her own successor, although she has so far declined to publicly discuss whom she will choose.
Jacobs, 59, played a major role in Blackburn's gubernatorial campaign, serving as her campaign treasurer and campaigning across Tennessee on her behalf.
The WWE Hall of Famer has already confirmed that he would be interested in the job.
"Obviously it's a huge honor for me, so I would consider it very seriously," Jacobs said last month when asked about a potential appointment.
Jacobs became one of professional wrestling's most recognizable stars during his decades-long WWE career.
He performed as the masked "Big Red Machine" Kane and winning multiple world championships before entering Republican politics.
His competition for the seat is expected to include Rep. Tim Burchett, Deputy Gov. Stuart McWhorter and Rep. Chuck Fleischmann.
Burchett has openly expressed interest and has spent much of the past year campaigning alongside Blackburn across the state.
Defense Secretary Pete Hegseth had also been floated as a possible candidate amid speculation over his future in the Trump administration.
However, multiple reports now indicate that Hegseth is no longer under consideration for the appointment.
President Trump has previously offered glowing praise of Jacobs, writing earlier this year that the former wrestler has a "BIG political future in Tennessee" and describing him as a "great guy."
If appointed, Jacobs would serve until Tennessee voters choose a successor in a special election in 2028.