The Foxes are desperate to strengthen their strikeforce with a lack of goals in the first half of last season, undermining their defence of the Premier League title the club won so surprisingly in 2015-16.
Iheanacho, 20, found his opportunities limited during 2016-17, making just 5 starts in the Premier League, along with 15 appearances from the bench. With City determined to bring another experienced striker into the fold, Iheanacho’s appearances would be further restricted.
Pep Guardiola told the Nigerian international that he would be allowed to leave the Etihad if the right offer came along, and new Leicester boss, Craig Shakespeare, is acting swiftly to sign the striker.
There is plenty of interest in the youngster with Everton keeping an eye on the situation in case they need to replace Romelu Lukaku. The Toffees would be in the pole position to sign the Nigerian with the prospect of European football on offer.
However, Shakespeare is determined that Leicester will challenge for a top seven place next season and wants to strengthen his squad accordingly.
London clubs, Crystal Palace and West Ham United, are also circling.