The Premier League club had been looking to secure the English shot stopper from the Gunners.
However, the BBC states that the deal between Wolves and Arsenal is very much off.
The deal for the 26-year-old has proved too expensive for Wolves to sanction.
While the Molineux club did want a new goalkeeper, they cannot pay over the odds.
Ramsdale will now have to hope that another team comes in for him before Friday’s transfer deadline.