The Ghana left-back has been on a season-long loan with Die Knappen where he played 14 times in all competitions and scored once in the Europa League before going to January’s Africa Cup of Nations where he picked up a knee injury that ended his season prematurely.
But it seemed that he had already made a good enough impression with Schalke bosses who are keen to have him back next season even as Chelsea coach Antonio Conte has been reported by English media to be interested in giving him another look during pre-season camp.
Christian Heidel, Schalke sporting director, confirmed the negotiation on Thursday according to a tweet from the club.
"We are in talks with Chelsea FC about signing Baba Rahman for next season," Heidel said.
According to reports in England, newly promoted Newcastle United have also shown interest in the 22-year-old based on the recommendation of compatriot Christian Atsu.
Chelsea could keep him at Stamford Bridge as they need more players for their Champions League campaign next season but Schalke are going to test the waters before letting go of the Ghanaian.
Baba joined Chelsea from Augsburg for £21.7 million in August 2015 but failed to establish himself as a regular starter under Jose Mourinho or Guus Hiddink before being sent out on-loan by Conte.