Wenger informed the board on Tuesday that he will put pen to paper on the £8million-a-year deal that has been on the table for nearly the duration of the just concluded EPL season.
Pressure mounted on Wenger after the Gunners failed to make the top four for the first time in the Frenchman's 21-year tenure.
But the FA Cup final triumph over Chelsea, gave Wenger some respite at the end of a disappointing campaign.
Wenger revealed following the final that he would be sitting down with the board this week to confirm where his future lies.
Wenger said: “I love this club and I am looking forward to the future with optimism and excitement.
We are looking at what we do well and how we can be stronger everywhere.
"This is a strong group of players and with some additions we can be even more successful.
We’re committed to mounting a sustained league challenge and that will be our focus this summer and next season.
“I am grateful to have the support of the board and Stan in doing everything we can to win more trophies. It’s what we all want and I know it’s what our fans around the world demand.”
Majority owner Stan Kroenke said: “Our ambition is to win the Premier League and other major trophies in Europe.
It’s what the fans, players, staff, manager and board expect and we won’t rest until that is achieved.
"Arsène is the best person to help us make that happen. He has a fantastic track record and has our full backing.”
Chief executive Ivan Gazidis added: “There is no complacency anywhere at this club. Our goal is to compete for and win trophies here and in Europe.
Everything we do is designed to make that happen and we will be working hard on and off the pitch this summer to improve and make a strong challenge next season.
"The club has grown beyond recognition in every aspect in recent years and we have the platform to be successful and meet the ambitions we and our fans share.”
Wenger also admits he needs to slim down his squad.
"First of all, we have a very heavy squad at the moment so maybe we might lose some players.
We want to keep the strength we have and build on that," Wenger said. "We will work very hard to find the additions of top, top quality.
"I believe that our squad is very strong and we will only look for top-class people who can strengthen our team now.
The basis is there so we need the additions who will make a real difference.
“I love this club and I am looking forward to the future with optimism and excitement.
We are looking at what we do well and how we can be stronger everywhere.
"This is a strong group of players and with some additions we can be even more successful.
We’re committed to mounting a sustained league challenge and that will be our focus this summer and next season.
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