The latest reports suggest the forward is somewhat ironically stuck at a London airport trying to get back to Russia, but held up by heavy snow in the English capital.
The deal has been dragging on for the whole month and the fact it is now off, unless there are further twists in the saga - which can't be ruled out, will annoy Arsene Wenger intensely.
Wenger has already been running out off patience over the deal, saying at the weekend: "Frankly, I am fed up with all the talk about Arshavin.
"Because when the biggest star is a guy who has never kicked a ball for you, it's very difficult to understand.
"We don't need an instant saviour. And I don't believe in instant saviours."