The England international is set to miss the remainder of the Premier League campaign and the World Cup in Brazil later this year after rupturing the anterior cruciate ligament in his left knee against Tottenham last weekend.
Wenger feels Walcott's loss is a huge blow to Arsenal's title hopes but is confident the 24-year-old will return a better player.
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He told the club's official website: "Theo is handling it as well as you can when you have had such a shock because he's mentally strong. He's very balanced as a person and he can put it into perspective.
"We know that he will have the dedication and the serious attitude to come back as strong as ever.
"We lost a very talented player, a very intelligent player and a player who was just grabbing his form again. From game to game he became more influential; you've seen a complete player.
"He can always decide a game through a final ball or through a goal. Sometimes in the same game he does both.
"I felt against Tottenham he had a very convincing performance because he integrates well our style of play as he's been here for so many years now.
"When we combine at a high pace he's involved in it because he understands exactly what we want to do."
Walcott's absence has been somewhat offset by the return to training of Alex Oxlade-Chamberlain after five months out with a knee injury.
Full-back Carl Jenkinson believes the 20-year-old's return is a huge "boost".
"He's a fantastic player who brings an awful lot to the team," he added. "To have him back in and around the group is a boost for everyone - he's only young but he's a key member of the squad."