The 23-year-old Fiorentina winger only joined Juve in October 2020 on an initial two-year loan deal.
However, the Italy international has been heavily linked with a summer exit, with Chelsea and Bayern Munich expressing their interest earlier in the window.
The 25-year-old scored 11 goals and registered 10 assists in 47 appearances across all competitions during the 2020-21 campaign.
However, the Italy international has now entered the final year of his contract with the Serie A outfit, and the likes of Liverpool and Barcelona have been credited with an interest.
The Gunners are keeping tabs on Locatelli’s performances at Euro 2020 ahead of a potential transfer swoop for the 23-year-old midfielder.
The report adds that the Italian international is generating interest from elite clubs across Europe, such as Manchester City, Juventus, Borussia Dortmund and Paris Saint-Germain.
Paris St Germain have confirmed the signing of Moise Kean from Everton on a season-long loan after a miserable spell at Goodison Park.
The 20-year-old forward has struggled to settle in the Premier League since his £24.5m move from Juventus last summer, netting just four goals in 37 appearances for the Toffees.