The Barcelona legend is Pep Guardiola’s number one choice to fill the void left by Arteta who is expected to be confirmed as Arsenal manager later this month.
Iniesta, 34, is considering a player-coach offer at the Premier League champions where he would link up with his former Nou Camp team-mate and manager Guardiola.
Arteta has been City’s assistant manager since leaving Arsenal in 2016 and is hot favourite to replace Arsene Wenger at the Emirates.
A source told Yahoo Sport that club officials are in talks with Iniesta and the Spaniard is keen on a deal.
Iniesta is on the of the most decorated players in football history. A World Cup and European Championships winner, he has also lifted eight La Liga titles as well four Champions Leagues.
Originally, Iniesta said he would play on outside of Europe to avoiding risking playing against Barcelona. Moves to China or America were heavily touted.
But with the chance of a coaching role at one of the world’s most-high profile clubs, he has had his head turned.
The Barca great left boyhood club at the end of April after 22 years in Catalonia saying they are “the best club in the world who have given me everything”.
Yahoo sport UK