The 25-year-old is expected to move to St Mary’s to end his short spell in Spain.
He moved to the Yellow Submarine last summer after leaving Blackburn, following five years at Ewood Park.
But the Chile international struggled to make a consistent impact at the La Liga club. He failed to score in 20 appearances for Villarreal, although just six were starts.
Brereton Diaz joined Sheffield United on loan in January and scored six times in 14 Premier League appearances for the Blades, but was unable to stop their relegation from the top flight.
Southampton, promoted back to the Premier League last season after winning the Championship play-offs, have this summer lost Che Adams on a free transfer to Torino and have been in the market for a forward.
Brereton Diaz played in Chile’s three games at the Copa America last month as La Roja finished third in Group A, behind Argentina and Canada.
On Friday, Southampton agreed deals to sign Sao Paulo forward Juan and left-back Wellington.
Both players will move to St Mary’s when their contracts with the Brazilian Serie A side expire in January 2025.
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