According to reports from Sky Sports’ Fabrizio Romano, both clubs are in advanced talks and agreement would be completed soon over Ceballos return to the Emirates.
The 24-year-old, who failed to break into the Real Madrid first team, sealed a move to Arsenal in 2019 and would go on to play a key role for the Gunners.
The Spanish midfielder played a key role under Mikel Arteta as he guided the London club to the FA Cup title.
“We are talking to the club,” said Arsenal’s head coach. “Obviously we don’t own the player, he’s not in our hands, so the clubs will need to have a communication and see what we can do.”
It is reported that Mikel Arteta personally contacted Ceballos to convince him about a second Arsenal stint while he trained with parent club Real Madrid.
Ceballos had earlier stated he was keen on moving to Arsenal as he felt it would be a good step for his career.
Speaking to Sky Sports, he said: “I have to return to Real Madrid and they have to make a decision because I have a contract there for the next three years.
“Once I know their decision, I will sit down with my family and the people close to me and see what’s best for me next year.
“But the truth is I’m very happy at Arsenal. It’s a club in which I already have a year of experience, so it would be very easy to return. I wouldn’t have to adapt to a new league or new club with a different manager and players.
“I think it would be a good step for me.”