The Gunners boss takes his team to Tottenham on Sunday for a north London derby which doubles up as a celebration of his 15th anniversary in charge.
If Arsenal are to come away with anything they will need to contain the play-making talents of the man Tottenham refused to sell to Chelsea in the summer transfer window.
Chelsea were not the first club to take an interest in Modric, though, with Wenger having previously checked him out.
Wenger said: "We knew Modric before Tottenham knew him. We played against Dinamo Zagreb in the Champions League and he played in the same team as Eduardo against us.
"At the time we had (Cesc) Fabregas, not a bad player. But we were interested in Modric. He is very mobile. I'm not surprised how well Modric has done, I knew he would do well."
Arsenal winger Theo Walcott looks set to return on Sunday following a knee injury along with Gervinho (hamstring) but central defender Laurent Koscielny is out and Alex Song is likely to feature.
It could be a defining match in Arsenal's season as they attempt to recover from a wretched start.
Yet Wenger, whose last major trophy was lifting the FA Cup in 2005, insists he has lost none of his ambition and believes he still has the drive to make Arsenal the best club in the world.
Wenger said: "I miss winning titles. Very much. You only have one way, to fight and win again.
"I feel part of what is very important for us is to transform the club into a top-level club, into a club that has a fantastic future potential with values that we think are very important in the game.
"The style of play, the way we behave to develop young players, to give a chance to people who deserve it in life.
"That for me is very important in the history of the club. The vision is to make this club the best club in the world, it is as simple as that."
Wenger urged the Arsenal fans not to abuse Emmanuel Adebayor, the former Arsenal striker who is on loan at White Hart Lane from Manchester City.
"You want people to support the team in a positive way," Wenger said.
"A football game is a fantastic day that everyone has to enjoy and with a positive atmosphere it is even more fantastic so let our fans get behind our team and forget about the rest."