The England international defender was one of the few bright lights in an otherwise disappointing campaign for the Bluebirds, which ended in an immediate return to the Championship after off-field turmoil hindered a positive start.
Caulker was an £8m buy just last summer, but with the club now back in the second tier he is rumoured to be available for around the same figure.
Tottenham and Swansea have both been linked with offers to bring their former star back to White Hart Lane and the Liberty Stadium respectively, while Liverpool chief Brendan Rodgers – who managed him at the Swans – is also keen.
But Arsenal are firmly in the battle amid talk that top target Ashley Williams will not be on the move.
Caulker is seen as a wise addition by Arsene Wenger, who is preparing to cut Thomas Vermaelen loose but is wary that he has little cover for Laurent Koscielny and Per Mertesacker if he does.
The 22-year-old came through the ranks at Spurs before a loan stint at Swansea saw him establish himself as a Premier League star.