Sources close to the deal confirmed to Reuters that negotiations have been taking place but Racing said nothing had been agreed.
"We deny any agreement regarding the English player Owen Farrell," the French club said in a statement.
Farrell, who has 112 England caps and was made skipper by former coach Eddie Jones, has been at London club Saracens since making his debut as a 17-year-old in 2008.
Farrell's move to the current Top 14 leaders Racing 92, who recently signed South Africa's double World Cup-winning captain Siya Kolisi, would mean he cannot play for England under the RFU's rules agreed with the Premiership clubs.
England coach Steve Borthwick told reporters on Thursday he hoped Farrell would return to England, but that he respected the courage it took to walk away after last year's World Cup having reached the end of his tether with social media abuse.
"This is one of England’s greatest-ever players, greatest-ever captains," Borthwick said of the fly-half, who made his England debut under Stuart Lancaster in 2012.
"Any team in the world would miss an Owen Farrell but the work he has done to help create a foundation over these last months, to help re-set the England team and move forward, that is part of his legacy through this (Six Nations) tournament."
With Courtney Lawes also retiring from internationals, Borthwick will announce a new captain on January 17th when he names his squad for the Six Nations.
Several other England internationals have opted to play in France, ruling themselves out of international selection, including exciting young winger Henry Arundell, centre Joe Marchant, lock Dave Ribbans and flanker Jack Willis.
