The French centre-back, 27, had been linked with a move away from the Mestalla, with the Gunners and wealthy Russian side Anzhi Makachkala said to be interested.
Recent performances have prompted Arsene Wenger to look at bolstering his defensive line and it was believed that Rami was top of the manager's wish list.
However, it appears that the defender is keen to sign a new deal with Valencia after they offered him a contract extension.
"There's an offer from Valencia to extend my contract, and I feel good here," Rami told Canal+.
"The most important thing for me is to be a first-team regular, which is not the case for all my rivals for a place in the French national team."