The 22-year-old, who has become a mainstay of Unai Emery’s Gunners squad, told the club’s matchday programme that he nearly joined the Hoops in 2012, but admitted moving to Scotland was the big issue.
The Nigerian international recalled: “My situation was weird - there were three of us at the time and we were basically told ‘stay if you want or you’re free to go’.
“It was up to me and I went to the Crystal Palace training ground to see them.
“I had offers from Celtic and Southampton as well.
“Celtic was the main one, but I wasn’t ready to go to Scotland.”
Iwobi, who was part of the Super Eagles’ World Cup squad in Russia this summer, has made 19 appearances for Arsenal this season, scoring once, giving him a running total of 10 goals in 117 matches.
He won the FA Cup with Arsenal in 2017 as well as the FA Community Shield in 2015 and 2017.
Celtic have long scoured the youth systems of top English clubs for promising talent and this year signed striker Armstrong Oko-Flex from Arsenal. They were also linked with Gunners ‘keeper Arthur Okonkwo.