The source said negotiations with the Spanish giants were ongoing but dismissed media reports that an agreement had already been reached.
Diomande, 19, is under contract until 2030 in Leipzig but has become one of European football's hottest properties, particularly after starring for Ivory Coast at the World Cup.
In June, a source at Paris Saint-Germain told AFP that the European champions were interested in signing Diomande. The French club later pulled out after reported concerns about the size of the transfer fee.
Liverpool were also pursuing Diomande but reportedly had a bid rejected in June.
Leipzig supervisory chairman Oliver Mintzlaff told Sky Germany in April that Diomande would not be for sale "regardless of the asking price."
German tabloid Bild reported on Monday that Leipzig could bank upwards of 120 million euros for the teenager.
The Abidjan-born Diomande spent a few months in 2025 at Spanish club Leganes, then in LaLiga, and made his debut against Real.
He signed with Leipzig ahead of the 2025/26 season, where he scored 12 goals and laid on eight assists in the Bundesliga.