The defender is in the final year of his existing deal with Unai Emery's Gunners.
Spain international Monreal has made 165 Premier League appearances since moving to the Emirates Stadium from Malaga in 2013.
"At the moment we are talking with the club. I've always said I am really happy, I feel very happy playing for Arsenal," he said, according to the London Evening Standard.
"I came six years ago. I have a good relationship with them.
"We are in contact in any moment so don't worry about that. I am happy here. That is the most important thing."
Monreal, who has scored once in three appearances this season, turns 33 in February, but says he is not considering hanging up his boots.
"My idea is to play in football until my body says, 'Nacho, so sorry but that's the end'. But I think it is far (away)," he added.
"I hope so. You never know because your body, sometimes you start with some problems, some injuries and you can't continue giving 100 per cent.
"But at the moment I feel good so I am not thinking of my retirement."
