It's claimed Chelsea striker Michy Batshuayi will head to Dortmund on loan as Aubameyang's replacement.
Aubameyang is one of European football's most deadly finishes and Arsene Wenger wanted the 28-year-old on board to add firepower following Alexis Sanchez's departure to Manchester United.
Arsenal got Henrikh Mkhitaryan as part of the deal that took Sanchez north, but Wenger has opted to bring in Aubameyang to add a ruthless streak to the Gunners
One deal that won't be happening, though, is Olivier Giroud heading to the Bundesliga club in exchange for Aubameyang.
Sport Bild claim the Frenchman has rejected a switch to the club, as he fancies joining Arsenal's London rivals Chelsea instead.
Aubameyang made his first appearance of the year for Dortmund on Saturday in their
2-2 draw with Freiburg.
He was dropped for the last two games but failed to add to his tally of 13 league goals.
"We have said we are ready to agree to a transfer if certain conditions are met," Dortmund sporting director Michael Zorc
told Sky Sport Germany at the weekend.
"Either they meet our conditions and there can be a transfer or they won't be met and Aubameyang stays here until the summer.
"That's what his family have been told and they have accepted it."
Aubameyang could make his debut at home to Everton on Saturday \(5.30pm).