Danilo is firmly involved in the deal and expected to head to Italy, along with €30m to €35m, in exchange for Cancelo.
Danilo will depart City after struggling to hold down a place in Guardiola's starting XI following his 2017 arrival from Real Madrid.
Still, the Brazilian was part of a highly successful run with the club, winning two Premier League titles, two Carabao Cups and one FA Cup.
Sky in Italy say City will pay £27.5m for the 25-year-old Portugal global, who joined Juventus one year ago from Valencia.
Manchester City have been working on landing Cancelo all summer, with the full-back having been identified as a priority reinforcement by Pep Guardiola.
Cancelo cost Juve €40.4m in 2018 and made 25 Serie A appearances.
His move to the Premier League champions could be made official as soon as Tuesday.
Meanwhile Danilo joins a Juventus side who have had an extremely busy summer, signing centre-back Matthijs de Ligt from Ajax for €75m (£68m/$84m) in addition to adding Adrien Rabiot, Aaron Ramsey and Gianluigi Buffon on free transfers.