The Gunners produced a dismal performance against Nuno Espirito Santo’s team just three days after losing 3-2 at home to Crystal Palace.
However, Wolves are seventh after recording their 14th top-flight victory of what has been a strange campaign for them.
Huddersfield Town have completed the double over Wolves who have also dropped four points to Brighton and been beaten by Cardiff City this season.
However, they have beaten Chelsea, Tottenham and Manchester United and drawn with Manchester City.
Wolves scored their first goal in the 28th minute when Ruben Neves curled his free-kick past Bernd Leno and they doubled their lead nine minutes later - the unmarked Matt Doherty heading Jonny’s cross home.
Wolves scored a third goal just before the interval, Diogo Jota beating two hapless Arsenal defenders before firing his shot under Leno.
Unai Emery’s team were awful and almost fell further behind soon after the restart when Jota narrowly failed to latch on to Raul Jimenez’s cross.
Jimenez then lashed a shot wide before Arsenal scored a consolation goal with their first effort on target in the 80th minute - Sokratis Papastathopoulos heading Granit Xhaka's corner home.
However, there was no way back for Arsenal who are one point behind fourth-placed Chelsea after this result with three games of the season left.