Malone made a strong impression with Nuggets General Manager Tim Connelly and President Josh Kroenke in meetings with team executives, sources told the website. Interim coach Melvin Hunt was considered the other front-runner for the job.
The Kings fired Malone in December after an 11-13 start. In parts of two seasons with Sacramento, Malone went 39-67.
The Nuggets fired coach Brian Shaw in March following six consecutive losses. Denver finished the season with a 30-52 record, 12th in the Western Conference.