Gillibrand, a second-term lawmaker from upstate New York, will be named to fill the seat vacated when Hillary Rodham Clinton resigned to become secretary of state in the Obama administration, the aide said, speaking on condition of anonymity because an announcement hadn't been made. It was scheduled for later Friday.
Gillibrand's office didn't immediately return a call seeking comment.
She was considered one of the top contenders in Paterson's selection process, along with Kennedy and state Attorney General Andrew Cuomo.
Paterson's appointment lasts until 2010, when a special election will be held to fill the final two years of Clinton's term.
Kennedy, the daughter of the late President John F. Kennedy, called the governor around midday Wednesday and told him she was having second thoughts about the job, according to a person close to Paterson, who said she later decided to remain in contention, only to announce her withdrawal early Thursday in an e-mail.
Others in the field, including U.S. Rep. Carolyn McCarthy, whose husband was killed by a gunman on the Long Island Railroad, criticized Gillibrand as recently as Thursday evening, saying her support of more conservative issues such as gun ownership rights was out of step with most New York Democrats.
But Gillibrand is a proven vote-getter in a largely rural eastern New York district that sprawls from the mid-Hudson Valley to north of Albany. She defeated a long-term Republican incumbent in 2006 and won re-election last year by a wide margin.
"Gender plus geography equals Gillibrand," said Doug Muzzio, a political science professor at Baruch College. He said her upstate base would help Paterson's 2010 ticket, which otherwise would be dominated by New York City residents like himself.
"On the minus side, she's an unproven statewide vote-getter, a conservative `Blue Dog' Democrat who could face a primary challenge in 2010 and face a tough general election," Muzzio said. "Also, her congressional seat, the 20th, is a mostly Republican district that she first won in 2006 after a long Republican monopoly."
Those weaknesses, the appearance of being a second choice after Kennedy, and the wrath of more senior Democrats who were overlooked provide a good chance for a primary challenge in 2010 - a situation Paterson has sought to avoid. He said he wants his choice to be good enough to hold the seat for a decade or more.
Paterson's unusual move, as head of the state party and governor, to summon New York's Washington delegation to Albany for a closed-door meeting Friday morning appears to be a way to garner support among those he didn't choose.
Gillibrand, 42, becomes the only woman on a ticket that will include Paterson, Cuomo, Comptroller Thomas DiNapoli and senior U.S. Sen. Charles Schumer.
The pick came after a week in which Kennedy surprisingly withdrew from consideration and Paterson revealed he was considering Cuomo, who had refused to publicly express his interest. In the end, Paterson chose the up-and-comer over more established names.
But Paterson has said the first task of a new U.S. senator should be bringing more aid in the federal stimulus package back to New York. It's uncertain that Gillibrand has the background or pull to do that.
She voted last year against the $700 billion Wall Street bailout bill.
This consideration, as the state faces a historic fiscal crisis, was considered a strength for Kennedy, who is close to President Barack Obama and may have been owed a favor for her early endorsement of him; and Cuomo, who has ties and experience in Washington as President Bill Clinton's former housing secretary.
Gillibrand was an official in the Housing and Urban Development Department during the Clinton administration. She worked as a lawyer before challenging Republican John Sweeney in 2006 to represent New York's 20th District. Her upset win came after a police report showing that Sweeney's wife had called 911 in what appeared to be a domestic violence incident was leaked shortly before the election.
In November, Gillibrand defeated wealthy General Electric heir Sandy Treadwell. The former state Republican chairman was seen as one of the Republican Party's best chances to capture a congressional seat in New York.
Gillibrand graduated from Dartmouth College in 1988 and earned a law degree at UCLA in 1991. She is the daughter of Albany lobbyist Douglas Rutnik.