American Eagle, which has more than 1,000 stores in the US, has hired property agent Harper Dennis Hobbs to find a store in central London and met with key landlords last week.
The retailer is the latest in a growing line of youth US fashion brands to target the UK. Hollister, Urban Outfitters, and Forever 21 already have a collection of stores, while J Crew is due to open on Regent Street later this year.
American Eagle initially looked at entering the UK two years ago but shelved the plans.
The company targets 15 to 25-year-olds with affordable fashion.
The number of international retailers looking at London highlights the continuing attractiveness of the city for businesses. London has become the first destination for international retailers looking to launch across Europe.
Other overseas retailers with plans to open in London include Brazilian brand Melissa Shoes.
Property agents Knight Frank said the international demand is driving up rents on retail properties in the West End.
Darren Yates, research partner at Knight Frank, said: “Generally, demand for good-quality space exceeds supply and recent months have seen numerous new international entrants to the London market, with more expected to open in the coming months.
“The capital’s restaurant sector is particularly buoyant and continues to see an influx of diverse catering concepts from abroad, as well as expanding domestic operators,” he continued.