Wenger acquiesced to Walcott's desire to play as a striker and the move paid dividends as the 23-year-old banged in three goals and set up two more to secure a morale-boosting win that lifted the Gunners to fifth in the Barclays Premier League.
Walcott turned down a new contract at the end of last season and as it stands he can leave the Emirates Stadium next summer on a free transfer.
But Walcott revealed last night that contract talks with Arsenal are ongoing, and Wenger is hopeful the England international will commit his future to the north London club in the near future.
"I've always wanted to sign him and extend his contract and hopefully we can do it very soon," the Arsenal manager said.
Wenger was reluctant to offer any further insight in to the progress of the negotiations with Walcott, but he was more than happy to discuss the forward's stunning performance.
Walcott broke from his own half before slotting past Tim Krul for a Thierry Henry-esque opener, and added his second following a mad 45 minutes in which Newcastle equalised four times to take the match to 4-4.
Walcott's last goal was arguably the pick of the bunch. Cheick Tiote bundled him over in the box, but he picked himself up and chipped a delightful shot over Krul to ensure he took home the match ball.
Wenger, who has seen Walcott deliver four goals from the last three games he has played as a striker, thinks the former Southampton forward is improving in his new role.
"We enjoyed the goals from Theo," Wenger said.
"He knows he can score and he has become a much stronger finisher and a much better finisher, and you could see that (against Newcastle).
"He scored a 'Thierry' goal, the first one.
"It was the same angle, the same finishing, the same quality to put it in to the side net, it was great to see."
While Wenger was happy to have ended 2012 with a flurry of goals, he was also unnerved by his team's defending.
Shorn of Per Mertesacker, who missed out through illness, the Gunners looked weak at the back, with poor marking allowed Sylvain Marveaux and Demba Ba to find the target after the break.
"Yes, it is a worry because we were three times in front and three times they came back," said Wenger, whose team now face Southampton on New Year's Day.
"But Newcastle are a team that is good going forward. "I was impressed by Ba, he had an excellent game. The midfield as well, I felt that Marveaux had a very good game, Tiote as well. They are a strong team."
Newcastle themselves were also inept at the back. Olivier Giroud was only on the pitch for 16 minutes but he managed to score twice and he would have had a hat-trick had he not struck the bar in the dying minutes.
The Magpies are without key defenders and they were also fatigued following their Boxing Day thriller against Manchester United, but the fact remains that they have conceded 25 league goals on their travels this season and manager Alan Pardew admits his team must tighten up fast.
"We gave soft goals away against Manchester United and Arsenal," Pardew said.
"Some of the goals were just not good enough for us. We have to do a little bit better than that.
"Offensively our players looked like they had the bit between their teeth. "(Gabriel) Obertan and Marveaux played well but we need to defend as a team and that is everyone."