FoxSports.com reported that the talks have included Cubs infielder Ryan Theriot as a potential part of the deal. However, the Dodgers want the Cubs to put some money in the deal, according to the report. Lilly has $4.3 million remaining on his contract; Theriot $933,000.
Lilly can be a free agent after the season. He is 3-8 with a 3.69 ERA in 18 starts, but has received the least amount of run support in the Major Leagues.
The 34-year-old was drafted by the Dodgers in 1996 and was traded by the Dodgers to the Expos in the Carlos Perez deal at the 1998 Trade Deadline. He reached the Majors with Montreal in 1999 before being dealt again the next year to the Yankees, for whom he pitched parts of three seasons for manager Joe Torre.
Lilly, whose next scheduled start is to be on Monday against the Brewers at Wrigley Field, would join a Dodgers rotation of Clayton Kershaw, Chad Billingsley, Hiroki Kuroda and Vicente Padilla.
Theriot received a $2.6 million salary this year after losing an arbitration case to the Cubs. He's under team control through 2012.
The Dodgers also have been looking for a relief pitcher. Among those they've scouted are Toronto's Scott Downs and Seattle's David Aardsma.
The Dodgers acquired outfielder Scott Podsednik from the Royals on Wednesday for catcher Lucas May and young pitcher Elisaul Pimentel.
Ken Gurnick is a reporter for MLB.com. This story was not subject to the approval of Major League Baseball or its clubs.