The teenage centre-back was talked up as a possible target for the Gunners earlier this year after catching the eye for local club Liverpool FC.
Arsenal are not alone in showing an interest, as Premier League rivals Chelsea and Liverpool are also understood to have made enquiries, but it is the London outfit who appear to have got Caceres most excited.
"It was flattering to hear this as they are a top team. I don't know much about their new manager but I watch Arsenal a lot as I like the style of football," he is quoted as saying by The Sun.
"To play in the Premier League would be a dream for me as my ambitions are firstly to play in Europa and then play a World Cup with the Uruguay first team."
Caceres, who has represented Uruguay at age-grade level, would not require a work permit to join a Premier League club as he holds a Spanish passport.