The 24-year-old is expected to leave the club at the end of the season despite making 34 Ligue 1 appearances for Unai Emery's side this term, 26 of which have been from the start.
Arsenal had been regarded as the frontrunners for the Brazilian's signature having reportedly held talks with the player in January before he decided to stay in the French capital.
The Gunners are understood to see Lucas as a possible replacement for Alexis Sanchez, whose future at the Emirates Stadium remains uncertain as he approaches the final year of his contract.
However, Telefoot claims that Atletico have now emerged as favourites to sign the winger amid speculation that the Spanish giants could lose Antoine Griezmann this summer.
Lucas is currently enjoying the best goalscoring season of his PSG career having found the back of the net 16 times across all competitions.