The contract does not include a break clause and, should it be completed, will extend his reign to 23 years.
Neither Arsenal nor Wenger, 67, see this as definitely being his final contract.
Arsenal are expected to spend at least £100m on new players in the upcoming transfer window, which starts on 1 July, having also spent around that figure last summer.
The Gunners finished fifth in the Premier League this season, the first time they have finished outside the top four since the Frenchman joined in 1996.
They finished 18 points behind champions Chelsea, but beat the Blues 2-1 to win the FA Cup at Wembley on Saturday.
Wenger met club owner Stan Kroenke on Monday to determine his future, with the decision relayed to directors at a Tuesday board meeting and an official announcement expected on Wednesday.
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