Unai Emery is desperate to bolster his backline before Thursday's transfer deadline, particularly as Laurent Koscielny has now joined Bordeaux.
Rugani was previously a target but the Gunners, who had hoped to sign him on loan, could not afford the permanent deal favoured by Juventus.
Upamecano has now emerged as another potential recruit, although Arsenal may similarly struggle to meet RB Leipzig's £50m asking price.
Emery's transfer budget is severely resricted following the £72m purchase of Nicolas Pepe, a deal which has been structured to minimise the amount of money Arsenal have to pay up front.
Upamecano made 14 Bundesliga starts for Leipzig in an injury-hit campaign last term.
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