The 27-year-old Bosnia international has impressed new manager Manuel Pellegrini so much in pre-season, that the Chilean coach is determined to keep the frontman at the Etihad Stadium in 2013/14.
Gunners boss Arsene Wenger has been forced to endure a frustrating transfer window, having already failed with a bid to bring Liverpool striker Luis Suarez to the Emirates Stadium.
The typically frugal Frenchman launched a £40,000,001 bid for the controversial Uruguayan, in the hope it would activate a release clause in his Anfield contract.
It turns out that the fine print in Suarez's agreement means that Liverpool are not obliged to sell, so Arsenal have accepted defeat and turned their attention to alternative transfer targets.
Dzeko has been identified by Wenger as a player that would significantly strengthen the north London club's forward line, but Pellegrini has no intention of parting with the former Wolfsburg star, even after completing the signing of Alvaro Negredo.
Manchester City were also heavily linked with a move for Edinson Cavani, prior to his switch to Paris Saint Germain.
However, one reason why Pellegrini didn't follow up Roberto Mancini's interest in the South American, is because he has been dazzled by Dzeko's potential.