Manchester United say they are "delighted" after agreeing a fee in principle of 85m euros (£73m) with Borussia Dortmund for Jadon Sancho.
The 21-year-old England winger is expected to sign a five-year contract with the option of a sixth.
He will finalise terms and complete a medical after his Euro 2020 campaign.
The fee, payable over five equal instalments, will see Sancho become the second most expensive English player of all time behind Harry Maguire.
Defender Maguire joined United from Leicester for £80m in 2019.
Manchester City are due 15% of the profit Dortmund will make on Sancho, who joined the Bundesliga club from the Blues for £10m four years ago. That equates to about £9.5m.
United boss Ole Gunnar Solskjaer has identified four key positions he wants to improve as they look to build on their progress last season.
United contact Real Madrid about Varane
Solskjaer is now targeting a central defender as the next part of his recruitment before the new season.
BBC Sport understands contact has been made with Real Madrid about France World Cup-winning defender Raphael Varane.
The 28-year-old's contract expires next summer and there are doubts over whether he will be offered an extension that would meet his demands.
It is thought Real may be willing to let the player leave the Bernabeu for around £50m.
Sancho deal bring an end to a long chase
After steering his side to second in the Premier League and the Europa League final, Solskjaer is looking to strengthen the right side of his midfield, then the central defensive, midfield and attacking areas.
Sancho fills the first of those.
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The deal brings to an end a long chase for the Londoner. United expected to sign him last summer but could not agree a fee.
Sancho scored 50 goals and registered 57 assists in 137 appearances for Dortmund, scoring twice in the German Cup final to help the Bundesliga side to a 4-1 victory over RB Leipzig in May.
He has won 20 caps for England since making his international debut in 2018, scoring three goals, and was named in the Bundesliga Team of the Season in 2018-19 and 2019-20.
City to United via Dortmund - Sancho timeline
March 2000: Born in Camberwell, south London, growing up in nearby Kennington.
2007: Spotted by Watford at the age of seven, registering as a player two years later.
March 2015: Joins Manchester City shortly before his 15th birthday for a fee rising up to £500,000.
August 2017: Leaves City aged 17 without making a senior appearance, joining Borussia Dortmund for about £10m.
October 2017: Part of England squad that wins the U17 World Cup, though he only takes part in the group stage before being recalled by Dortmund. Makes his Dortmund debut as a late substitute in a 2-2 draw at Eintracht Frankfurt.
April 2018: Scores his first Dortmund goal in a 4-0 win against Bayer Leverkusen a month after his 18th birthday.
October 2018: Makes his England debut aged 18 in their Nations League draw with Croatia, the first player born in the 2000s to play for the Three Lions.
September 2019: Scores his first England goals at the age of 19 in a 5-3 win against Kosovo.
February 2020: Becomes the only teenager to score 25 Bundesliga goals after hitting the opener in a 5-0 win over Union Berlin a month before his 20th birthday.
June 2020: Ends the 2019-20 season with 20 goals and 18 assists in 44 appearances for Dortmund in all competitions.
May 2021: After his proposed move to Old Trafford fell through in 2020, Sancho notches 16 goals and 20 assists across all competitions in 2020-21 for Dortmund, earning him a spot in Gareth Southgate's Euro 2020 squad.
June 2021: United agree £73m deal with Dortmund.
How Sancho compares to Man Utd attackers
Sancho's move to Old Trafford will see him link up with Marcus Rashford, Edinson Cavani, Anthony Martial and Mason Greenwood in what could prove a formidable attack for Solskjaer's side.
Sancho scored 16 goals in all competitions during the 2020-21 season, five fewer than Rashford, but four more than Greenwood, and nine more than Martial. Cavani, who joined United on a free transfer last year after leaving Paris St-Germain, netted 17.
In four seasons at Dortmund, Sancho notched 57 assists and created 65 big chances, more than Rashford, Martial, Greenwood and Cavani during the same period.
|Sancho v Manchester United forwards - since start of 2017-18 season (all competitions)|
|Player||Appearances||Goals||Assists||Shots on target||Big chances created||Mins per goal involvement|
Sancho also stacks up well when compared to some of the biggest names in Europe.
Since the start of the 2018-19 season, only seven players have more combined goals and assists than the England international. Of those players, only Barcelona's Lionel Messi (43) has created more goals than Sancho (41) in that time.
|Goals and assists - Europe's top five leagues since 2018-19|
'One of the most exciting players in Europe' - what they've said about Sancho
Former Watford youth coach Louis Lancaster: "It doesn't matter if he's walking out on Hackney Marshes or Wembley in front of 80,000 people - it's football, it's fun. What you've seen of him is nothing compared to what's to come."
Former Watford academy team-mate Perry Price: "He's always mentioned big clubs - Real Madrid, Barcelona. It was always part of his plans. He sacrificed his youth for football."
Former Borussia Dortmund boss Lucien Favre: "Jadon's a world-class player, no question about that. I've rarely seen a player who has come so far at such a young age."
Borussia Dortmund sporting director Michael Zorc: "Jadon Sancho is definitely one of the most exciting players in Europe."
England manager Gareth Southgate:" Jadon's is an unusual story for a young English player. He's been brave enough to go abroad and play. He is a player that excites us a lot."
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