Assistant District Attorney Joann Risse said prosecutors would waive three of the five child pornography possession charges against him if he pleaded guilty on two remaining charges.
Karr, 41, would get credit for time served and would be placed on probation for three years. He also would be required to register as a sex offender.
Defense lawyer Robert Amparan said that he would discuss the deal with Karr but that he still believes his client is innocent.
Amparan said the public had received a "false picture" of Karr, whom he described as a "Southern gentleman with a sense of humor."
Karr's bail was set at $200,000 after Judge Cerena Wong called him a flight risk. Karr spent several months in the Sonoma County jail in 2001 awaiting trial on the child porn charges and fled after being released.
Amparan would not say whether his client could afford bail but said Karr would remain behind bars for now.
Karr, a schoolteacher, was arrested Aug. 16 after making phone calls and writing e-mails suggesting he killed Ramsey, a 6-year-old beauty queen, in her Boulder, Colo., home in December 1996. He was returned to the U.S. from Thailand only to have the Ramsey case collapse.
DNA tests failed to connect Karr to the crime, and investigators had no evidence he was in Boulder at the time of the slaying.