The Manchester Evening News state that sources in Italy claim that the Sky Blues have reached an agreement for Gundogan.
City will be managed by Pep Guardiola next season and the Daily Mail stated that the Spanish manager wants to see Gundogan at the Etihad next season. John Stones, Paul Pogba and Lorenzo Gonzalez are all reportedly on Guardiola’ shortlist.
Gundogan was heavily linked with a move away from the Bundesliga giants last summer but instead signed a one-year extension.
The 25-year-old has six assists and three goals in 32 appearances for Dortmund this season. Gundogan career began at Nuremberg before moving to Dortmund for £4m in 2011.