The 28-year-old, who has been used just three times in the Premier League all season, is due to be out of contract in the summer.
football.london reports that Mustafi is set to become the next player to leave Arsenal this window, with the German close to becoming a free agent.
Clubs from Germany and Italy are said to be monitoring Mustafi's situation, with Lazio among those waiting to pounce.
Sead Kolasinac and William Saliba have been loaned out by the Gunners this month, while Sokratis Papastathopoulos had his contract terminated and Mesut Ozil joined Fenerbahce on a free. body check tags ::