The long saga is finally coming to an end as Walcott will sign a long term contract with Arsenal.
The 23-year-old England forward, who is in the final six months of his deal, rejected a five-year offer worth £75,000 a week in August.
But agreements have now been reached between Arsenal and their top scorer, who could put pen to paper on Friday if legal formalities can be completed.
Arsenal, who face Chelsea on Sunday, are set to confirm the news next week.
Talks stalled after Walcott turned down Arsenal’s summer proposal and it is only in the last two weeks that meaningful progress has been made.
Arsenal lawyers and the player’s advisors spent all of Thursday in negotiations before agreeing on most issues by 19:00 GMT.
The club had tabled a five-year contract worth a reported £90,000-a-week with a signing-on bonus worth around £3m.
Walcott favoured a three-and-a-half year deal but common ground has been found on that, and also on the complex area of image rights.
This will bring an end to another protracted contract saga involving the Gunners, but this time they are keeping their player.