Raphinha has emerged as a top target for the Gunners, who are looking to revamp their forward line this summer.
The Brazilian would prefer a move to Barcelona but the Catalan giants are still trying to figure out how much money they can spend in the ongoing transfer window.
The winger is open to a move to Arsenal and the north London club made their first offer on Tuesday night, which was rejected out of hand.
Leeds not only knocked back the bid but were baffled by how low an offer the Gunners made for the winger.
It fell short of what Leeds want before they would agree to sell the player in the ongoing transfer window.
Leeds have been clear that they would not let the 25-year-old go without getting a premium transfer fee given he still has two years left on his contract.
Raphinha, who is also a target for Chelsea and Tottenham, has also not officially requested a transfer, which has further strengthened Leeds’ hand in negotiations.
It has been suggested that Leeds want somewhere north of £60m for the player before agreeing to sell him.