Zagadou will enter the final year of his Dortmund contract in July, and the lack of progress over a renewal has led to interest from multiple clubs.
Speaking on The Transfer Window Podcast, Castles highlighted the Gunners have been keeping a close eye on him, and he is a ‘strong option’ for the north London club.
He added that the Premier League outfit are preparing a move to sign the 21-year-old Frenchman, who could be available for €30 million or less this summer.
Zagadou is a left-footed centre-back, and he has impressed over the past few years with his strong aerial presence and quality distribution.
The Gunners presently have two left-footed central defensive options in Gabriel and Pablo Mari, and both have impressed over the course of the season.
However, Mari has been linked with a possible move to Villarreal to replace Pau Torres, who could be on his way to the Premier League this summer.
This may open up a spot for Zagadou in the squad, and his versatility of playing left-back would provide an added boost for the Gunners.
However, the main concern for the moment remains his fitness, having missed a staggering 35 games through multiple injuries this term.
The Frenchman recently returned from a muscular concern, only to suffer a serious knee injury which has ruled him out for the rest of the campaign.
A move does not seem worthwhile, and the Gunners need to be wary of spending a major chunk of their summer budget on an injury-plagued player.
Stats from Transfermarkt.com