The Sun says Villa boss Martin O'Neill sent scouts to check on the Croatia striker on Tuesday and is ready to step up his interest.
O'Neill has received glowing reports on Mandzukic, 23, who struck twice for Dinamo Zagreb in a 5-1 Champions League qualifier win over FC Koper.
The Irishman can bolster his transfer kitty with the anticipated sales of Nigel Reo-Coker, Steve Sidwell and Luke Young.
And he is prepared to use a large chunk of his expected transfer pot to lure Mandzukic to Villa Park.
Mandzukic has guided Zagreb to back-to-back league and cup doubles in Croatia in the last two seasons but wants a fresh challenge in the Premier League.