WASHINGTON -- President-elect Barack Obama has settled on former rival Hillary Rodham Clinton to be secretary of state, following a high-stakes courtship that is expected to lead to a formal announcement after the Thanksgiving holiday, aides to both said.

After an extensive examination of former President Bill Clinton's complicated financial dealings, the Obama transition team is satisfied that the nomination will not pose any conflicts of interest, an aide to the president-elect said.

On her end, Mrs. Clinton is ready to give up her Senate seat and become the nation's top diplomat, friends and advisers said yesterday. They added that she has not yet accepted the job.

Hillary Rodham Clinton

The developments came amid a blur of leaks yesterday that Mr. Obama was close to naming other members of his Cabinet. Among them: New Mexico Gov. Bill Richardson for commerce secretary and Arizona Gov. Janet Napolitano for homeland security.

As recently as a few days ago, Mrs. Clinton was prepared to return to her role as the junior senator from New York. Senate Democrats have considered creating a new leadership position for Mrs. Clinton, recognizing her stature within the party.

Mr. Obama's overture surprised her, colleagues said. The two met to discuss it Nov. 13 in Chicago.

Sen. Barbara Boxer, D-Calif., said she spoke privately with Mrs. Clinton about the Cabinet prospect during a Democratic organizational meeting Tuesday in the old Senate chamber.

"I kept saying I thought it was such a good fit for her," Ms. Boxer recalled. "And she said: 'I just wasn't thinking about this. This wasn't in my mind.' She was a bit thrown off by it. My strong impression was she really didn't expect it. She was planning her role in the Senate. Hillary is a very thoughtful person, and I could see she was really thinking it through."

The Obama transition team and Mrs. Clinton's Senate office both said the nomination is "on track."

Mr. Richardson and Sen. John F. Kerry, D-Mass., the Democratic presidential nominee in 2004, have also been mentioned as possible candidates for the job.

After a withering presidential campaign, bringing Mrs. Clinton into Mr. Obama's circle was a feat of diplomacy in itself. As candidates, the two competed hard for the nomination, with loyalists trading tough charges.

In March, Mr. Obama's team put out a memo challenging Mrs. Clinton's foreign policy credentials. Greg Craig, who worked in Mr. Clinton's State Department, wrote that, as first lady, Mrs. Clinton "did not do any heavy lifting with foreign governments, whether they were friendly or not."

Mr. Obama recently named Mr. Craig to the post of White House counsel.

Mr. Obama and Mrs. Clinton also have represented different factions in the party.

He was favored by better-educated, wealthier voters; she was the hero of women and a more downscale swath of the electorate.

For Mrs. Clinton and Mr. Obama to have gotten to this point testifies to their political maturity, Ms. Boxer said.

"If this were to happen, it's a wonderful signal about our president-elect and also shows that Hillary is willing to forgive and forget too," Ms. Boxer said.

One obstacle to the appointment was Mr. Clinton's finances. The former president has made a fortune delivering speeches around the world, while taking in hundreds of millions of dollars from anonymous donors for his private foundation and library. Some money has come from foreign sources, including a $10 million gift from the Saudi royal family.

During the campaign, Mr. Obama released a memo claiming that the secrecy surrounding the donors showed that Mrs. Clinton, despite her years in public life, had not yet been fully vetted and had a "history of misleading voters."

To clear a path for his wife's appointment, Mr. Clinton agreed to several concessions: He gave the Obama team the names of more than 200,000 donors to his foundation and library; he agreed to clear any future paid speeches with the White House and State Department; and he said he would distance himself from his foundation.

An Obama aide yesterday said the "financial disclosure issues have been worked out." And an aide to Mr. Clinton said: "If she does not do it, it won't be because of my boss."

Yet some Democrats doubt that the alliance can work, or that it will avoid controversy.

Mr. Obama is famously averse to drama; the Clintons have proved to be drama magnets.