Manchester City and Manchester United are also keen on the 17-year-old South American teenage sensation, and more European clubs could join them and the Gunners in the race for him going forward.
Arsenal have been bolstering their youth ranks with players full of huge potential, while they have mostly focused on recruiting young players for their first-team of recent.
Leon has caught their eyes with his performances, with two goals in 11 games to his name for Cerro Porteno so far this season.
The defender notched the winner for the Paraguayan Primera Division club against Sportivo Ameliano on his league debut and has continued to impress Arsenal and other suitors since.
His attacking prowess and eye for goals have impressed scouts, and a move to Europe is believed to be very near for Leon if he continues at this rate.
A move to England would appeal to the Paraguayan, but whether he has what it takes to hit the ground running in the English top-flight right now remains to be seen.
As a result, a loan move elsewhere could be in his best interest as far his development goes, and it is an option the Gunners could consider ahead of their move for him.
Manager Mikel Arteta has proven he is willing to give youngsters playing minutes if they are good enough, with a chunk of them getting the chance to prove themselves against Bolton Wanderers in the Carabao Cup last month.
Joining such a club would be attractive to Leon, but pipping others to his services could prove tricky for Arsenal, and they have to table a juicy proposal to have a chance of landing him.
