Luiz has spent six and a half years at Chelsea during two spells and has made 160 Premier League appearances, scoring 11 goals.
His departure, if confirmed, comes five weeks after Frank Lampard returned to Stamford Bridge to manage his former club.
Chelsea are banned from signing players until the end of January 2020 following an investigation into their signing of foreign under-18 players.
With Gary Cahill, who has since joined Crystal Palace, released at the end of last season, Chelsea's options at centre-back include Germany's Antonio Rudiger, Kurt Zouma, who was on loan at Everton last season, and Denmark's Andreas Christensen.
Having signed for Chelsea from Benfica in a £21m deal in January 2011, Luiz joined Paris St-Germain for £40m in June 2014 before returning to Stamford Bridge in August 2016 for £34m.
Luiz was present at Chelsea's Cobham training ground on Wednesday, although he did not take part in first-team training.
The 32-year-old Brazil centre-back, who signed a new two-year Chelsea deal in May, will have a medical at Arsenal on Thursday.
On Tuesday, Arsenal sold defender Laurent Koscielny to French side Bordeaux for a fee of up to 5m euros (£4.6m).
They are also set to sign Celtic left-back Kieran Tierney for £25m.
Luiz has spent six and a half years at Chelsea during two spells and has made 160 Premier League appearances, scoring 11 goals.
His departure, if confirmed, comes five weeks after Frank Lampard returned to Stamford Bridge to manage his former club.
Chelsea are banned from signing players until the end of January 2020 following an investigation into their signing of foreign under-18 players.
With Gary Cahill, who has since joined Crystal Palace, released at the end of last season, Chelsea's options at centre-back include Germany's Antonio Rudiger, Kurt Zouma, who was on loan at Everton last season, and Denmark's Andreas Christensen.
Having signed for Chelsea from Benfica in a £21m deal in January 2011, Luiz joined Paris St-Germain for £40m in June 2014 before returning to Stamford Bridge in August 2016 for £34m.
Luiz was present at Chelsea's Cobham training ground on Wednesday, although he did not take part in first-team training.
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