The 28-year-old has featured on just 11 occasions for the Spanish champions in all competitions this season and has been deemed surplus to requirements having fallen out of favour with Zinedine Zidane.
Isco is destined to leave the Bernabeu when the transfer window opens later this week and although, according to AS, the talented playmaker’s preference is to remain in Spain and team up with his former national team boss Julen Lopetegui, Arsenal remain in the hunt.
Arsenal have already taken Dani Ceballos on a season-long loan from Real, but would be permitted to sign Isco on a temporary basis.
Premier League rules prevent clubs from signing more than one player on loan from the same team in England, but the guidelines differ when it comes to recruiting players from abroad with Tottenham currently retaining the services of Benfica duo Gedson Fernandes and Carlos Vinicius.
Mikel Arteta is desperate to add more creativity to his side having exiled Mesut Ozil, who was ironically replaced by Isco in the Spanish capital following the Germany World Cup winner’s move to the Emirates seven-and-a-half years ago.
The under-fire Arsenal manager’s decision to leave the club’s highest-paid player out of his domestic and European squads has been a divisive one, with several of his most senior players said to be keen on the 32-year-old’s reinstatement.
Youngster Emile Smith Rowe made his first Premier League start in the No.10 role in the Boxing Day win over Chelsea, but Arteta is said to view Isco as a suitable temporary solution with Ozil’s return almost totally out of the question.
As well as Ozil, several other experienced first team squad players are out of favour but the likes of Sokratis Papastathopoulos and Shkodran Mustafi are more likely to depart at the end of the season when their contracts expire.
William Saliba is certain to depart on loan amid interest from Premier Leauge and Championship clubs, while Reiss Nelson also looks set to leave having been left out of the squad last week.