Manchester City has reportedly fended off interest from Premier League rivals Arsenal and Liverpool to secure the England international's transfer.
The move follows a failed £35m deadline day switch to Liverpool four months ago, which collapsed after Palace could not secure a replacement.
Guehi's arrival will provide crucial defensive reinforcement for City, who are currently facing an injury crisis with key defenders Ruben Dias and Josko Gvardiol sidelined.
The Crystal Palace captain will not be part of his current team's travelling squad for their upcoming match against Sunderland as his exit progresses.