Atletico have reportedly been monitoring the player closely and have sent scouts to watch him on several occasions this season.
They are said to have tabled a £12 million offer in a bid lure the goal poacher away from Vicarage Road.
Diego Simeone has hinted that Ighalo can solve their goal scoring problem.
To realize this, Atletico will have to offload striker Jackson Martinez who has not been in form for the club to create space for the Nigerian.
Ighalo has 14 goals in the Premier League this season from 18 games.