UPDATE 1-Taco Bell replaces McDonald's as NBA sponsor-source

(Adds McDonald's comments in last two paragraphs)

CHICAGO, July 2 (Reuters) - Taco Bell has replaced McDonald's Corp (MCD.N) as the National Basketball Association's official fast-food sponsor, a source familiar with the deal said on Thursday.

Taco Bell, the Mexican fast food chain of Yum Brands Inc (YUM.N), and the U.S. sports league have signed a four-year deal that includes heavy media exposure on the NBA's broadcast rights partners, ABC, ESPN and TNT, said the source, who asked not to be identified because the deal has not been officially announced.

The deal also includes NBA-themed promotions at Taco Bell's 5,600 outlets and NBA-themed advertising and advertising rights to the Saturday night skills challenge held during the NBA all-star game in February, the source said. The terms of the deal were not available.

An NBA spokesman declined to comment and officials with Taco Bell could not be reached to comment.

An announcement of the deal is expected as soon as Thursday and the deal will be effective immediately, the source said.

Taco Bell has partnerships with nine NBA teams. Yum has had an international relationship with the NBA since 2006 with its KFC brand, starting first in France and expanding to 16 countries across Asia, Europe, Latin America and the Caribbean.

McDonald's, which had been the NBA's fast-food sponsor since 1990, confirmed the end of its deal.

"We have enjoyed a mutually beneficial relationship for nearly 20 years," John Lewicki, director of alliance marketing for McDonald's USA, said in a statement. "We thank the NBA for their partnership and wish them continued success.

"We will continue to work with several local NBA teams, across the U.S." (Reporting by Ben Klayman; editing by Andre Grenon)