There has been fear that decades of enmity between the two could spill over into all-out war
The England international started just 15 league games and scored five goals in the 2015/16 season.
But Walcott, 27, has already matched that goal tally this term following a double in Arsenal's win over Swansea City on Saturday.
Arsenal manager Wenger, speaking ahead of Wednesday's Champions League tie against Ludogorets, said of winger Walcott: "Look, I haven't spoken to anybody because I was not ready to let him go. I always wanted to keep him.
"What I've seen of him is that he lets the passion for the game come out of his body. That's what you want from him.
"I've felt that since he's played with more freedom, maybe he lets his feelings come out a bit more and is less calculating: 'Can I do that or can I not do that?'," the veteran French boss added.
"He plays with more freedom and more desire. I think he has a less restricted attitude and that shows you that he is a completely different player."
Arsenal have won their last six matches in all competitions and could welcome Francis Coquelin back into the starting side on Wednesday.
He featured as a substitute against Swansea following the knee injury he suffered in last month's win over London rivals Chelsea.
"I feel 100 percent fit. It took me a few weeks to get back to full fitness, but now I feel good," said Coquelin.
"When you make these kinds of tackles, and this happened before against West Brom, you are a bit scared. It was a similar tackle to then.
"The good thing was that I could run back onto the pitch afterwards, even if I couldn't stay on for long. The scan which followed was all positive so that was great news."
Coquelin is having to fight more for first team action following the additions of Granit Xhaka and Mohamed Elneny over the last year.
But the Frenchman is aware that competition for places will always be intense at Arsenal and he is up for the challenge.
"Let's not forget we are Arsenal Football Club," he added. "There's always going to be great quality in this squad.
"You have to be ready for a fight. It's good for me to improve my game and give even more in training and every game. It can only improve the whole squad."
With four points from their first two Champions League Group A matches, Arsenal will be firmly on course for the last 16 if they can see off Bulgarian champions Ludogorets at the Emirates Stadium.
France striker Olivier Giroud and Wales midfielder Aaron Ramsey both trained on Tuesday but Wenger wants to give them longer to recover from respective toe and hamstring injuries.
David Ospina is set to replace Petr Cech in goal as he has in Arsenal's previous two Champions League matches.
German defender Per Mertesacker and England forward Danny Welbeck are still absent with new injuries.
There has been fear that decades of enmity between the two could spill over into all-out war
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