Former Republic of Ireland manager McCarthy has been trying to persuade Stadium of Light favourite Niall Quinn to join him as his assistant, but the ex-Black Cats striker has ruled himself out of a return to the club because he wants to move to Ireland and concentrate on a career in the media.
McCarthy is expected to be officially unveiled at a press conference today and will replace Howard Wilkinson and Steve Cotterill, who were sacked by the club on Monday night.
Having lost the battle to appoint Quinn, his number two is likely to be Ian Evans, who was his deputy when he was in charge of the Republic.
McCarthy will finally get the job which might have been his back in October, when Sunderland chairman Bob Murray instead made the surprise decision of appointing Wilkinson and Cotterill to succeed Peter Reid.
At that time, the 44-year-old Yorkshireman was experiencing a rough ride in his post as manager of the Republic of Ireland, and Sunderland seemed the ideal escape route.
However, the Football Association of Ireland were asking for a large compensation package, believed to be in the region of £1million, and the club opted for the FA's technical director instead.
McCarthy wanted former Republic striker Quinn, one of Sunderland's favourite sons, as his assistant.
The pair have a close relationship from their time together on the international scene, and Quinn is hugely popular with players and fans alike. Quinn has already sold his house in the north-east, and although he considered working alongside McCarthy at the club he loves, he is set to carry on with his plans.
McCarthy will look to make the most of the Irish connection at the club. Jason McAteer and Kevin Kilbane played in last summer's World Cup finals and Phil Babb also featured in some of his squads.
Sunderland also have a number of Irish youngsters, including Thomas Butler and Sean Thornton, who have broken into the first team, plus Cliff Byrne and Richie Ryan.
McCarthy, who has been out of work since resigning from the Irish job in November, will need to work a miracle and work it quickly if Sunderland are to avoid relegation, but his appointment is a long-term one rather than just a quick fix.
Sunderland are bottom of the Premiership with just 19 points.
However, with a further 27 up for grabs McCarthy has a chance to turn the club's fortunes around especially as four of his new team's next five matches are against fellow strugglers Bolton, West Ham, Birmingham and West Brom.