The Northern Ireland international spent the 2021/22 season on loan at Millwall, where he made 33 appearances in all competitions, scoring once.
The centre-back will move to Turf Moor after new Burnley manager Vincent Kompany played an important role in securing his signature.
The 22-year-old defender is yet to make a first team appearance for the Gunners, but has enjoyed regular game time during his loan spells in League One with Blackpool and most recently with Millwall in the Championship.
For the deal to be concluded, only the medical is left to be scheduled and as early as Friday, Ballard could be presented as a new Burnley player alongside manager Kompany’s press conference.
The Gunners want a clause inserted into the deal that would allow them to match future bids from prospective buyers if Ballard were to fulfil his potential in a Clarets shirt.
Reinforcing the defence is seen as the first priority for the Clarets after the departures of centre-back pairing Ben Mee and James Tarkowski on free transfers as well as reports linking Nathan Collins with Wolves.
Ballard will look to hit the right notes with his performances and help guide the Lancashire club back to the Premier League.