Palmeiras' No 10, simply known as Alan, will sign for Real in 2018 and represent their B team 'Real Madrid Castilla' next season, according to 'Diario AS'.
'Los Blancos' believe they are recruiting the next Philippe Coutinho and hope he can link up Vinicius, another Brazilian 17-year-old that will arrive in the Spanish capital next summer.
Alan's current deal in Brazil expires in 2019 and he has a £44m buy-out clause, but Real officials are hoping they can sign the young talent for half that price, given that they would be taking him in the final year of his deal.
The Spanish and European champions are building quite the B team with Martin Odegaard (18), Federico Valverde (19), Vinicius and potentially Alan all expected to be brought through to the first team in the coming years.