The 19-year-old made a decision to leave City as he believes he has not been given enough first-team opportunities.
It has been widely believed that Spanish giants Real Madrid have always been interested in his services.
Diaz's contract expires at the end of this season and, although manager Pep Guardiola insists City have done "absolutely everything" to convince him to sign a long-term extension, he is understood to be on the verge of joining Madrid for an initial £15.5million.
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For example, the Premier League heavyweights will receive another £3m if the player is offered a contract extension by Madrid in the future. "We do everything to keep them (the young players) but they decide". However, City have at least made sure that he will nearly certainly never end up at cross-city rivals Manchester United!
The agreement includes a 15 per cent sell-on clause, however English media claims of an anti-United clause have been dismissed, says AS.
They are clearly wary that Diaz may grow to become a world superstar, and want to do anything possible to prevent him from moving to their city rivals.
A statement on the club's website read, "Real Madrid CF and Manchester City have agreed to the transfer of the player Brahim Díaz, who remains linked to the club for the remainder of the season and the next six, until June 30, 2025".