The Daily Mail says Kagawa is set to complete his return to Borusssia Dortmund for £6.3million - just two years after leaving the German side.
Kagawa will sign a four year contract with the Dortmund, who sold the Japanese playmaker to United in 2012 for £12million.
But injuries have stunted the midfielders progress, and after failing to fit into David Moyes' side last season, he has now been deemed surplus to requirements by new manager Louis van Gaal.
Valencia were also interested in the Japan captain, but Kagawa wanted to return to the club where he made his name in European football.
For the big stories and the banter follow us on Twitter: @tribalfootball