Newspaper the Daily Star suggest the Colombian is close to a £27m switch to Goodison Park.
The report claims Everton boss Carlo Ancelotti has been key in convincing the 2014 World Cup star to swap Madrid for Merseyside, having managed James before during his time in charge at the Bernabeu.
James has found game time difficult to come by in recent seasons at Real Madrid, with current gaffer Zinedine Zidane not thought to be a huge fan of the midfielder.
Zidane, now in his second stint as Los Blancos boss, sanctioned James’ two-season loan spell at Bayern Munich back in 2017.
Now it’s understood Zizou is willing to sell the 29-year-old midfielder this summer, with the Daily Star saying Everton is believed to be the top destination.
It would be a marquee signing for the Toffees as Ancelotti looks to strengthen his side ahead of the new Premier League season.