The 33-year-old Argentine has three years still to run on his Selhurst Park deal, but is said to be prepared to make financial concessions to get back to the Allianz Riviera, where he spent six years and made 188 appearances before leaving for PSV Eindhoven in 2022.
Benitez arrived at Crystal Palace only last summer on a free transfer, but has featured just once in the Premier League, leaving him short of regular football.
A return for Benitez would depend on Nice's own goalkeeping situation resolving itself first. Yehvann Diouf's future at the club is up in the air after a difficult debut season on the Cote d'Azur, with the Senegalese international - recently demoted to third choice at international level behind Le Havre's Mory Diaw - said to be weighing his options once he returns from holiday. Should Diouf move on, Nice would look to activate the Benitez option as his replacement.
The goalkeeping situation is one of several talking points at the Allianz Riviera this summer. Sporting director Roger Ricort has confirmed forward Terem Moffi will never play for the club again after his representatives were told as much this week, while Spanish striker Kevin Carlos has also been frozen out following a disappointing first season.
Nice need to raise significant funds before they can move into the market themselves, and club officials have targeted the back end of August as the likely window for fresh incoming business once the departures are resolved.
For Palace, losing Benitez would leave them needing to revisit their goalkeeping options less than a year after signing him, though his lack of regular football this season behind Dean Henderson means a departure would not come as a major surprise to those inside the club.