The win takes Wolves, who were by far the better side, up from 10th to seventh in the EPL standings.
And With three games left of the season, Wolves are in contention to qualify for the UEFA Europa League – the second tier club football in Europe.
On the other hand, the Gunners remain fifth, one point adrift of fourth-placed Chelsea and four behind north London rivals Tottenham.
Ruben Neves opened the scoring with a direct free-kick from 25 yards before Matt Doherty headed in a second. Arsenal were left in a world of wonderment as Wolves led 3-0 at halt-time.
Arsenal pulled one back through defender Sokratis in the 80th minute but it was not enough.
Concise News understands that if Manchester City beat Watford in the FA Cup final the team finishing seventh in the Premier League will take the last available European spot.