The England international signed a new three-and-a-half-year deal - reportedly worth £100,000 a week - in January 2013, but that will have less than 18 months to run at the turn of the year.
The 25-year-old has started only two matches in 2014 after injuring a cruciate ligament in January, but returned against Burnley on Saturday, coming off the bench in the Gunners' 3-0 victory.
"I think he has one and a half years to go on his contract in December and it is never an easy job with him, you know.""We are starting to sit down with him," manager Arsene Wenger said.
Since joining Arsenal as a teenager from Southampton in 2006, Walcott has scored 45 goals in 195 league appearances and has established himself as a key man for both club and country.
"Will he be at his peak in the next few years? He should be, yes," Wenger said.
"He is 25. It is the best years now so hopefully we can profit from that."
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