The 19-year-old only joined RB Leipzig from Spanish side Leganes last summer, going on to have a breakthrough season with13 goals and nine assists in 36 games.
Diomande has been heavily linked with moves to several top European sides and had previously given his priority to PSG, but the French side were unable to agree a fee with their German counterparts.
Now, according to Fabrizio Romano, Diomande is set to return to Spain with Real Madrid in a €100 million+ deal.
He is expected to travel to Madrid for his medical next week and will officially put pen to paper on his five-year deal, keeping him at the Santiago Bernabeu until 2031.
Diomande will become the fifth signing of Jose Mourinho’s second spell in charge, joining Bernardo Silva, Marc Cucurella, Ibrahima Konate, and Denzel Dumfries.