As revealed by Goal on Tuesday, the 18-year-old, who is out of contract next summer, is set to join the Bundesliga club on loan, while he is also expected to commit to fresh terms at the Emirates before confirming his move to Germany.
With the likes of Alex Iwobi and Danny Welbeck favoured above Nelson in the pecking order at Emirates Stadium, he has made the decision to move in an attempt to secure regular first-team football.
Nagelsmann has now revealed that the deal is not yet complete, though he has admitted that talks are ongoing.
"We've taken an interest in Reiss Nelson, I can disclose that," he told reporters.
"But nothing is set in stone as there are still things to clear up. If it all works out, we'll have a player with great pace who can do a lot with the ball."
Nelson has made 16 appearances for the senior side, and featured in eight Europa League games for the club last season, while also playing in three Premier League games.
If the move is confirmed, Nelson will become the latest in a long line of English talent to move abroad in search of regular game time.
Jadon Sancho is regarded as one of the trailblazers in that regard, having departed Manchester City for Borussia Dortmund, while fellow former Gunners youth star Kaylen Hinds swapped the Gunners for Wolfsburg.
The likes of Reece Oxford, Mandela Egbo and Ademola Lookman have also looked for pastures new in Germany, having found their path to the first-team blocked in the Premier League.