Irfan Gundogan insists there has been no contact with the La Liga giants over a potential move to Santiago Bernabeu next summer.
The 23-year-old midfield schemer is currently under contract at the Bundesliga club until June 2015.
And current negotiations over an extension have been put on hold while he recovers from a back injury.
Arsenal and Manchester United are also reported to be keen on signing the Germany international, but Irfan Gundogan told German magazine Kicker: "There is no agreement between Gundogan and Real Madrid.
"We only put contract negotiations with Dortmund on hold because we did not want to put any extra pressure on him during his lay-off.
"Of course there is a chance that he will renew his contract."