The Gunners boss confirmed contract talks have resumed with the Arsenal star, and revealed a positive conclusion will have a knock-on effect on the rest of the squad.
Earlier this month Alex Oxlade-Chamberlain, Carl Jenkinson, Jack Wilshere, Kieran Gibbs and Aaron Ramsey all signed new contracts, and Walcott, whose deal runs out at the end of the season, has been locked in negotiations for the past few months.
His contract stalemate had led to speculation that the likes of Liverpool, Manchester United and Manchester City could look to pinch him on a free transfer at the end of the season, but Wenger insists talks between the club and the player are progressing well.
"I'm convinced it will have a positive effect on the rest of the team if we sign him," Wenger told reporters on Thursday. "We want to keep him here.
"Our priority is to keep players at the club. We have rebuilt a team and we have to show that we can be consistent now."
Arsenal fans have been forced to watch as the club's best players have been allowed depart in recent seasons. Cesc Fabregas, Samir Nasri, Robin Van Persie and Gael Clichy have all left the Gunners in recent years in search of trophies.
And Wenger admitted there could be one or two shown the door at Arsenal this transfer window.
"If Squillaci finds a club, he might go," Wenger continued. "Djourou might go as well."