Reports from Portugal indicate the Gunners are set to pip Manchester United to the signature of the 22-year-old, despite their offer falling short of the midfielder’s £37m release clause.
Carvalho has shone for Sporting Lisbon since making his debut in 2011.
His fine form saw him earn a place in Portugal’s World Cup squad, and caught the eye of Gunners boss Arsene Wenger and United chief Louis Van Gaal.
Portuguese newspaper Ojogo are reporting that Arsenal have pipped their domestic rivals to the signature of the highly-rated youngster.
Carvalho’s arrival at the Emirates would take Wenger’s summer spending past the £90m mark.
The Frenchman has already splashed out £35m to land Chile star Alexis Sanchez, and spent £12m on right-back Mathieu Debuchy.
A further £16m went on Southampton defender Calum Chambers, while goalkeeper David Ospina arrived from Nice for £3m.
Wenger has been scouring the market for a defensive midfielder all summer.
He was strongly linked with a move for Sami Khedira, but that trail has gone cold due to the World Cup winner’s huge wage demands.
The Gunners boss has also been linked with Bayer Leverkusen ace Lars Bender and Southampton’s Morgan Schneiderlin, as he looks to add bite and steel in the centre of the park.
Source: Daily Star