The Gabon international was all set to join the Ligue 1 giants next month in a £70m deal, but the transfer failed to materialise.
A report in Bild claimed that PSG boss Unai Emery has decided to focus on other targets, which now opens the door for other clubs to swoop in for the attacker.
According to Sky Sports News, City are preparing a bid as Aubameyang is one of the few strikers that manager Pep Guardiola feels possesses the quality that he is looking for.
It has been suggested that Aubameyang could be leaning towards a move to Liverpool.
The 28-year-old, who has been part of the Dortmund fabric since 2013, scored 40 goals for the club in all competitions last season.