Nolito was pictured dining with new Sevilla director of football Oscar Arias at a cafe next to the club's Ramón Sánchez Pizjuán Stadium on Tuesday afternoon.
City are willing to let the 30-year-old leave the club this summer, a year after he joined from Celta Vigo for £13.8 million, after he fell out of favour with Pep Guardiola.
Nolito has barely featured for the City first team since Christmas and he recently made his displeasure at his situation clear, stating in an interview that he hoped the Blues would allow him to return to Spain.
But it is Sevilla who appear to have won the race by agreeing to pay Nolito's €4m annual salary in full for the duration of a one-year loan deal.
It is also understood that a clause has been inserted into the deal which would allow Sevilla to purchase the Spain international outright at the end of next season.
Nolito will link up with Eduardo Berizzo, his former coach at Celta, once the deal is confirmed, as the Argentine recently replaced Jorge Sampaoli.