The Frenchman, who has been in charge since 1996, had been reluctant to publicly commit to a new deal, but chief executive Ivan Gazidis said that will happen soon.
Gazidis described the 64-year-old Wenger as the "right person to see us forwards."
"We have always supported Arsene, the board has always been completely behind him as has (owner) Stan Kroenke, and Arsene has always been committed to this football club," Gazidis said. "So we are comfortable with the position, we are relaxed about it ... Arsene will be extending with us. And at the right time we will make that announcement."
Plucked from the relative obscurity of Grampus Eight in Nagoya, Japan in 1996, Wenger has delivered three Premier League titles and four FA Cups at Arsenal.
"This football club is the football club of his life," Gazidis said.
Although Wenger has not won a trophy since 2005, Arsenal is top of the Premier League and still in the Champions League and FA Cup.
Wenger's financial power in future transfer windows will be enhanced by Arsenal signing its biggest-ever commercial deal.
Puma is replacing Nike as Arsenal kit maker in deal that is reported to be delivering 30 million pounds ($50 million) a year for five years for the London club.
"The money from this deal will be available to the club from this summer," Gazidis said at the Puma announcement on Monday. "It represents an important step in our progression on and off the pitch."
Arsenal's turnover in 2012-13 was 243.6 million pounds ($404 million), the eighth highest in football, according to accountancy firm Deloitte last week.
"One of our long-term goals has been to increase commercial revenues and there is a football reason for that — from the summer onwards the money will be available for the manager to spend how he sees fit," Gazidis said.
"We have a vision to be competing at the top of the world's game, but we don't get there overnight. We are doing it our way, without relying on any single individual, on an independent path."
Rob Harris can be followed at www.twitter.com/RobHarris