The 28-year-old has again been a regular for Los Blancos this season despite some injury problems, making 21 appearances in all competitions, contributing one goal in the process.
Mendy's contract at Bernabeu is due to expire next summer, though, and there has been a host of speculation surrounding his future in recent months.
Bayern Munich's Alphonso Davies is believed to be a leading target for Real Madrid, with the club expected to attempt to sign him during this summer's transfer window.
According to The Athletic, the decision has been made for Mendy to be sold despite playing an important role in the club's success in recent years.
The report claims that Los Blancos head coach Carlo Ancelotti is a huge admirer of Mendy's defensive qualities, but the club believe that now is the right time to move him on.
Mendy arrived at Real Madrid from Lyon in 2019, and he has represented the capital outfit on 154 occasions, scoring six goals and registering 10 assists in the process.
The Frenchman has won two La Liga titles, one Copa del Rey, three Spanish Super Cups, the Champions League and the UEFA Super Cup during his time at Bernabeu.
Injuries restricted him to just 28 appearances last season, though, and he has also spent time on the sidelines this term with muscular problems.
Fran Garcia is currently the back-up left-back at Bernabeu, and the Spaniard, who re-joined the club from Rayo Vallecano last summer, has made 22 appearances this season.
The 24-year-old has featured 16 times in La Liga, but there has also been speculation surrounding his future, with Real Madrid seemingly interested in re-signing Miguel Gutierrez from Girona.
Ancelotti was asked about a possible move for Gutierrez during his press conference on Friday and refused to rule out a return to the Spanish capital.
As a result, there could be huge changes in the left-back area this summer, with Mendy and Garcia potentially both departing, and Davies and Gutierrez arriving for the 2024-25 campaign.
There have previously been suggestions of Premier League interest in Mendy, although it is unclear at this stage whether any English clubs are planning to move for the Frenchman.