The Gunners' bid for the 29-year-old England international is reported to be in the region of £20m and has triggered the release clause in his contract.
Vardy scored 24 goals in the Premier League for Leicester as the Foxes won the 2015-16 title.
The forward, who is currently preparing for Euro 2016, joined City for £1m from Fleetwood in 2012.
Vardy rose through non-league football after being released by Sheffield Wednesday at 16 for being too small, and was named the Football Writers' Association Footballer of the Year for 2015-16.
Since making his England debut in 2015, he has scored three times in eight internationals.
Arsenal, who finished second in the league, 10 points behind Leicester, have already signed Switzerland midfielder Granit Xhaka from Borussia Monchengladbach.
IT SEEMS IT'S HAPPENING.....
Well, Jamie could well be joining the gunners this week prior to a medicals. Arsenal Striker Olivier Giroud has confirmed the story, "I am aware that Vardy is coming to Arsenal, the news has been relayed to me" Giroud told a French Sports TV after their friendly game.
More to follow.......
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