The Bayern Munich midfielder has agreed to join the Welsh club on a season-long loan.
His arrival is a huge coup for Swansea boss Paul Clement, who coached the Portuguese ace while working at Bayern as assistant to boss Carlo Ancelotti.
Manchester United, Chelsea, Liverpool and Monaco were all interested in signing the 20-year-old.
But Clement’s close relationship with Ancelotti has swung the deal in favour of Swansea.
Sanches has been made available for a loan move away from Bayern after struggling for games.
He joined Bayern from Benfica for £31m in May last year before helping Portugal to Euro 2016 glory.
He made 26 appearances for the German champions last season.
Ancelotti believes Sanches would benefit from playing regular football in the Premier League this season and his friendship with Clement gave Swansea a headstart in their bid to pull off what would be the highest-profile signing in the club’s history.
The final details of Sanches’ move to South Wales – including a loan fee and wage structure – will be ironed out today.
Swansea sources refused to confirm a deal for Sanches had been completed last night but Clement is confident of getting the deal completed before tonight’s 11pm deadline.
Clement also plans to add West Brom’s Nacer Chadli and Manchester City striker Wilfried Bony to his squad on what is set to be a busy final day of the transfer window.
Chadli has been a long-term Swansea target, and Clement hopes he can finalise a £20m deal for the former Tottenham midfielder.
Bony is keen on a return to Swansea where he first made his name.
Clement must also decide whether to allow Fernando Llorente to join Chelsea for £10m.
Llorente was Swansea’s top scorer last season, but has a long-term admirer in Blues boss Antonio Conte who he played for at Juventus.
