The former Bayern Munich midfielder says the Gunners' centre-back does not have the quality to play at the highest level, and also doubts the quality of two other playersArsenal defender Per Mertesacker as "overrated", and claims he is not good enough to play international football for Germany.
Die Mannschaft led Sweden 4-0 after an hour of their World Cup qualifier on Tuesday night - with the Gunners' centre-back among the goalscorers - but then proceeded to crumble as the game ended in a 4-4 draw.
Since then there has been an inquest by the German media, seeking reasons for their inability to hold on to the lead, and Matthaus gave his damning verdict in an interview in his homeland.
"Some players are overrated. [Mats] Hummels, who was missing in Berlin [against Sweden], was missed as [Per] Mertesacker, for me, lacks international calibre," he told Bild.
"[Holger] Badstuber and [Jerome] Boateng don't have world-class quality yet."
But despite his concerns over a number of personnel within the national side, the former World Player of the Year insists there is no need to panic on the back of a single disappointing result.
"In foreign countries everyone is fancying our football - only we [Germans] are complaining," he added.
"We have lost World Cup finals with [Paul] Breitner or [Karl-Heinz] Rumenigge on the pitch, Champions League finals with me and [Stefan] Effenberg. We do have leaders, they are just different types."