The 24-year-old begins a four-match ban this weekend after being shown a straight red card during the 2-1 victory over Burnley last Sunday.
Xhaka, a £30million signing in the summer from Borussia Monchengladbach, was praised by Wenger for his commitment and dedication.
But the Gunners boss believes his tackling technique is a fundamental problem and thinks the best course of action is to simply stop doing it.
The Switzerland international now has nine red cards for club and country since 2014.
"(I have concerns) more about his technique," Wenger said. "I think he's not naturally a great tackler and in his decision-making I think he is quite intelligent on the pitch.
Arsene Wenger's moment of madness during Arsenal v Burnley
Mon, January 23, 2017Click through the gallery for the best snaps of Arsene Wenger's moment of touchline madness during Arsenal v Burnley
Click through the gallery for the best snaps of Arsene Wenger's moment of touchline madness during Arsenal v Burnley
"But it's more the way he tackles that is not really convincing. He doesn't master well the technique of tackling.
"I would rather encourage him not to tackle, to stay on his feet and that's the best way to deal with it. Tackling is a technique that you learn at a young age.
"You can improve it but when you are face-to-face with somebody, it's better you stay up."