The Gunners have struggled to reach the latter stages of the Champions League for the past few seasons, last getting to the semi-finals in 2009.
"Arsenal are not right at the top level," Lahm told reporters.
"They are a top team, with good players and have a lot of experience. They always go through the group stage.
"I'd say they are one of the better teams in Europe but right at the top level? I don't think so."
Bayern and Arsenal face off in the second leg of their Champions League last-16 clash later today.