The Frenchman hopes Walcott, 23, will now be able to go on and fulfil his potential for the north London club.
"We are all delighted that Theo has signed a new contract. He joined us as a 16-year-old and since then has developed very well to become an extremely important player for both Arsenal and England," Wenger said.
"Theo is a strong player and also a great person, and the combination of his ability and pace always make him such a valuable asset either from the flanks or down the middle.
"Theo's contract extension now gives us a strong nucleus of ambitious young players who have committed to the club and want to be successful with us as a group."