The 25-year-old was only a bit-part player for Los Blancos in the 2021-22 season and is seemingly surplus to requirements under manager Carlo Ancelotti.
Toni Kroos, Casemiro and Luka Modric were already ahead of Ceballos in the pecking order, and his prospects of game time in the 2022-23 campaign are also slim.
Federico Valverde and Eduardo Camavinga are also preferred in the midfield, while Aurelien Tchouameni will also be competing for minutes at the Bernabeu next season.
Ceballos now has less than 12 months left to run on his contract with Real Madrid, who are determined to offload him for a cut-price fee before he leaves on a free transfer next year.
According to Cope - via Mundo Deportivo - a fee of €10m (£8.5m) will be enough to sign Ceballos, who will not be offered a contract renewal by Real Madrid.
The Spain international learned his trade at Real Betis before joining Real Madrid in 2017, and Los Verdiblancos are said to be keen to re-sign their former protege this summer.
However, Betis are failing to meet the €10m (£8.5m) price tag, and Ceballos could therefore remain in the Spanish capital in spite of his desire to return to the Copa del Rey holders.
Ancelotti has allegedly promised Ceballos that he will play more minutes next term, but the former Arsenal loanee may not get the regular action he is after ahead of the 2022 World Cup.
Ceballos has totalled five goals and three assists in 74 games for Real Madrid over the past five years, but he only set up one goal in 18 matches during the 2021-22 campaign.
After recovering from a serious ankle injury, Ceballos made two starts in La Liga and played just 37 minutes of Real Madrid's triumphant Champions League run.
As well as securing the signature of Tchouameni, Real Madrid have signed Antonio Rudiger on a free transfer this summer, and Ancelotti does not expect any more incomings to arrive at the Bernabeu.
"I can tell you we won't sign anyone. We're fine as it is," Ancelotti told reporters earlier this month. "Tchouameni and Rudiger will bring a lot of quality to the squad. Rudiger is a great centre-back who can play in different positions, while Tchouameni is the same as a midfielder."
Marcelo, Isco and Gareth Bale have all left the club as free agents, while Luka Jovic has signed for Fiorentina, and the likes of Jesus Vallejo, Mariano Diaz, Marco Asensio and Takefusa Kubo could also depart in the coming weeks.
Real Madrid will take on Barcelona in their first pre-season friendly in Las Vegas next Saturday before subsequent meetings with Club America and Juventus later this month.