Current proposals are to race in the Spanish capital from 2026 until 2035 on a course laid out around the IFEMA convention centre in the northeast of the city, close to its Madrid-Barajas international airport.
The five-kilometre parkland circuit would use the IFEMA pavilion complex and fairgrounds, which is often used for exhibitions and conferences, as its start-finish straight and the site of the paddock complex.
It would also use some existing streets, including the M-11 motorway, to loop alongside football club Real Madrid's Valdebebas training complex and through the former grounds of the Mad Cool music festival.
The plans have received support from the city and community councils of Madrid, although the race has sought external investors so it can be fully funded with private money.
Autosport understands Fernando Alonso's former manager Luis Garcia Abad is one of the key figures behind the deal.
Spain's current grand prix in Barcelona holds a valid contract until 2026, so if Madrid's plans go ahead F1 would host two races in the country that season, in which case the new race could be provisionally labelled the Madrid Grand Prix.
The trademarks 'Formula 1 Madrid Grand Prix' and 'Madrid Grand Prix' were registered in March this year.
But with European slots on the F1 calendar limited, Madrid's impeding arrival looks set to put increased pressure on Barcelona's long-term future.
"You can never say never in life, of course, but two races in Spain is very complicated," F1 CEO Stefano Domenicali said when talks over a race in Madrid got underway.
"There is great interest [from Madrid], but it is also true that we are focused at the moment on Barcelona, which has a contract, and the relationship is strong."
Spain last held two races in Spain between 2008 and 2012 with the European Grand Prix in Valencia complementing the Barcelona race.
Interest in the country has increased in recent years thanks to F1's wider popularity surge, two-time world champion Alonso's strong results since his comeback in 2021 and Carlos Sainz's frontrunner status at Ferrari.
This year's reported race day attendance of 125,565 spectators was the highest at the Circuit de Barcelona-Catalunya since 2008.
