City are in hot pursuit of the Portugese international right back.
With Juventus willing to sell to fund their own summer moves, City are close to an agreement for around £53.6 million.
The news comes from Goal, who believe the two clubs are in advanced talks for the player.
Cancelo would be a replacement for Danilo and would compete with Kyle Walker for the first team right back spot.
The 25-year-old is excellent going forward, but Juventus had reservations about his defensive ability.