Gunners chief Arsene Wenger has made a full-back his top priority, after losing Kieran Gibbs to a thigh injury, problem he picked up against Liverpool.
Talks between the two clubs are now at an advanced stage, with the Londoners eager to push the deal through before the transfer deadline.
Wenger was believed to be tracking one time Newcastle target Gaetan Bong, but altered his plans once aware of Malaga’s willingness to sell Monreal.
The Spaniards are keen to offload a number of the their high earning players, in a bid to reduce their expenditure.
Wenger took full advantage of this over the summer to snap up Santi Cazorla, and is hopeful that he can repeat the deal for the defender.
The Spanish international has been linked with Atletico Madrid recently, Malaga are thought to favour selling to a foreign club.
Monreal is reportedly in England for a medical, which should be completed ahead of the 11pm cut-off point.
Malaga signed the full-back from Osasuna in 2011, as part of their long-term plan to become a leading European club.
He has made nine senior appearances for Spain.