Isco still has three years left on his current Madrid contract but is not guaranteed regular starts with James Rodriguez, Cristiano Ronaldo and Gareth Bale all ahead of him in the pecking order.
That could see him move on this summer as Arsenal are hoping to bring him to the Premier League to give Arsene Wenger another attacking option.
Wenger already has Santi Cazorla, Mesut Ozil, Aaron Ramsey, Jack Wilshere, Tomas Rosicky and Alex Oxlade-Chamberlain as central playmaking options but will still look to strengthen again with a move for Isco.
The 23-year-old attacking midfielder has made 33 league appearances for Madrid this season, scoring four goals with nine assists, and was a part of the side that crashed out of the Champions League to Juventus on Wednesday night.
He joined Madrid from Malaga for around £21 million in June 2013 and has made a total of 105 appearances for the Spanish giants.
Wenger has spent big money on acquiring Ozil and Alexis Sanchez over the past two seasons and a big money move for Isco would be another sign of the club’s intentions to win a first league title since 2004.
Would Isco be a good signing for Arsenal? Is he what the Gunners need?