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City have been in negotiations with the Brazilian club for a number of weeks and, after some resistance, have finally made a breakthrough in talks which the Premier League club believe will lead to 19-year-old Reis eventually joining them.
Palmeiras had hoped to keep Reis for next summer's Club World Cup.
However, City sources believe if the deal, which is reported to be for £29.4m, is eventually concluded, Reis will join them immediately.
A Brazil under-17 international, Reis has made 18 league appearances for Palmeiras.
A right-footed central defender, it is intended Reis will form part of a reshaping of Pep Guardiola's squad that is also planned to include Lens defender Abdukodir Khusanov, while talks are continuing with Eintracht Frankfurt over a deal for striker Omar Marmoush.
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