Aouar reportedly agreed personal terms with the Gunners but a move to the Emirates Stadium could not materialize and Arsenal turned their attentions to Thomas Partey, whom they signed for £45m from Atletico Madrid.
Aouar helped Lyon reach the UEFA Champions League semi-finals last season and has started the current campaign with one goal in four Ligue 1 games for Rudi Garcia’s men.
The 22-year-old has a contract at the Groupama stadium until the summer of 2023 and has no qualms about remaining at the club for the time being.
"It wasn't necessarily Arsenal or anything else, even if in the end it was about that," Aouar told Telefoot.
"Obviously, we had to make a choice, and I'm happy to stay here. I'm happy to stay in Lyon.
"It's my city, my club - it is a great pride to represent OL.
"I had a lot of discussions with [Lyon sporting director] Juninho. He shows me his confidence every day.
"To stay here for another season, or more, with him is a great source of pride."
Aouar has been capped once by the France national team.
