The 21-year-old has been heavily linked with a move to the Gunners following his performances for Brazilian outfit.
The defensive midfielder has proven himself to be a key figure, contributing 12 goals and nine assists in 141 appearances.
The North Londoners allegedly had a bid turned down during the summer. However, a recent report suggested that the Premier League leaders are still monitoring Danilo’s situation as they look to bolster their midfield.
Arsenal could face fierce competition for the 21-year-old’s signature, though, with the Catalan giants believed to be showing an interest.
According to Estadio Deportivo, Barca view the Brazilian youngster as a potential replacement for Sergio Busquets, who is set to become a free agent at the end of the season.
Danilo has a deal at Palmeiras until December 2026.