Chelsea had set a deadline of two weeks ago for rival clubs to meet their £120million valuation of the Argentina midfielder, and with that deadline now having passed, City are readying a formal bid in an attempt to get the move over the line before next Tuesday's transfer window closes.
Fernández, 25, is believed to be keen on the move, which would reunite him with Manchester City manager Enzo Maresca, his former manager at Chelsea.
Chelsea will demand a profit on the £106million they paid Benfica for the midfielder in 2023, and may also insist on having a replacement lined up before sanctioning his departure — with Real Madrid's Eduardo Camavinga among the names the club have been linked with as a potential successor, a scenario that would add further complexity to any deal.
Fernández's standing at Stamford Bridge has been unsettled since he was dropped last season amid reports linking him with a move to Real Madrid, and he was heavily booed by Fulham supporters on his first Premier League appearance of the season as a substitute on Monday night — a reaction to his part in a bad-tempered World Cup semi-final win over England.
Chelsea's own fans responded rather differently, however, singing his name during the same match.
Manager Xabi Alonso has made clear he wants clarity over Fernández's situation before the window shuts.
"In football, I am not surprised by anything. We will see. My wish is that we know what will happen for the future but we will see this week," Alonso told the BBC.
With City ready to push for a deal and Chelsea holding firm on their valuation, the coming days are expected to determine whether Fernández's three-year spell in west London comes to an end before the transfer deadline.
City's interest comes as part of a broader midfield rebuild at the Etihad Stadium, with the club having already sold Rodri to Barcelona this summer and Maresca keen to reshape his options through the middle of the park in his first transfer window in charge.
A reunion with Fernández would give City a player Maresca knows intimately from their time together at Stamford Bridge, and one capable of stepping straight into a leading role given his experience of both Premier League and international football at the highest level.