Man City’s pursuit of central midfielder Rodri has been boosted by the deal between the two Madrid clubs.
Marcos Llorente, who will move from north to south Madrid for around £36m (€40m), plays in a similar role to Rodri.
It’s believed the deal could be the catalyst for the Rodri deal to get over the line.
Llorente had been at Real Madrid for 11 years, since he was 13 years old.
He played 39 times for Real Madrid, include 16 appearances for Los Blancos last season.
Atletico had been chasing the 24-year-old Spaniard for some time, but the transfer fee had been a stumbling block.
“Real Madrid CF and Atletico de Madrid have agreed on the transfer of player Marcos Llorente,” said Real Madrid.
“The club wants to show its gratitude for all these years of dedication and professionalism and for his exemplary behaviour since he came to our academy in 2008 to his trajectory with the first team.”
Meanwhile, Atletico said: “His excellent work as both midfielder and defender features a notorious capacity to anticipate and an intuition to intercept his rivals’ passes.
“During the 2016/17 season, he made his debut, and at only 21 years old he became the player who made the most recoveries during the season, with a total of 303 recoveries.
“We welcome a great football player and wish him the best of luck in this beautiful and new challenge defending the Atlético de Madrid shirt.”
Earlier this week, it was reported that Man City told Atletico that they would be triggering Rodri’s £63m (€70m) release clause.
The player has already started contract talks with the Citizens, as Guardiola looks to cement his Fernandinho replacement.
Rodri had been contemplating a move away from Atletico since the end of the season.
But, ultimately it was Guardiola’s project at City that convinced the Spaniard to move to the Etihad Stadium.
The Spanish international had been on Guardiola’s radar for some time, with interest also from across town at Old Trafford.