It was reported earlier on Friday that Wenger would pen a new three-year deal with the Gunners over the weekend, but the club have now officially announced that the Frenchman will remain at the Emirates Stadium.
Wenger told the club's official website: "I want to stay and to continue to develop the team and the club. We are entering a very exciting period. We have a strong squad, financial stability and huge support around the world. We are all determined to bring more success to this club.
"The club has always shown faith in me and I'm very grateful for that. We have gone through fantastic periods and also periods where we have had to stick together.
"Every time when that togetherness was tested, I got the right response. I think that I have shown some loyalty as well towards this club and hopefully we can make some more history. I am sure we can."
Wenger recently brought an end to the club's nine-year trophy drought by leading his side to a 3-2 victory over Hull City in the FA Cup final.