Posh have agreed a fee with the Premier League side for the 19-year-old, who will now discuss personal terms and undergo a medical at London Road.
Mendez made 40 appearences on loan with Posh scoring five goals to help Darren Ferguson's side to promotion back to the Championship.
His contract at Molineux is not due to expire until 2013 but he now looks set to move to Cambridgeshire permanently.
Source: Team Talk
Source: Team Talk