Arsenal are second in the table, seven points behind Manchester United with a game in hand and a home match against the leaders to come on May 1, but Merson believes they lack the winning mentality to become champions.
"They have got no chance," the former England forward told Reuters in an interview. "I was really bullish about them five weeks ago but now you have to question them.
"They have just dropped too many easy points. I think it's all down to (a lack of) winning mentality."
Merson said Arsenal's surprise 2-1 League Cup Final defeat by Birmingham City in February was symptomatic of their problems.
"Getting beaten at Wembley by Birmingham summed it up for me," said the former Aston Villa, Middlesbrough and Portsmouth player.
"If they had beaten Birmingham I would have called that a successful season for them because at least they would have won their first trophy for six years and it would have helped to give them that winning mentality."
Merson, who won 21 caps for England between 1991-98 despite addictions to drink, drugs and gambling during a career he chronicles in shocking detail in his latest book 'How Not To Be A Professional Footballer', said Arsenal had two glaring weaknesses.
"They need a goalkeeper and a centre half and until they get those positions sorted out they won't win anything," said Merson who made 425 appearances for the London club, twice winning the league in 1989 and 1991.
"They will obviously still win games and some people will still drool about their playing style but that's because they never win anything.
"A good goalkeeper saves you about 10 points a season. Arsenal's goalies have cost them at least eight points this season so how can any team possibly give away 18 points a season and still win the league?," added Merson.
"Wojciech Szczesny will be a top goalie in years to come but what are they doing bringing a 41-year-old keeper (Jens Lehmann) back to the club?."
WENGER BACKING
Some supporters believe Arsenal should change their manager but Merson disagrees.
"If Arsene Wenger left tomorrow and Jose Mourinho left Real Madrid, every club in the world would want Wenger ahead of Mourinho," said the 43-year-old.
"I say that because Mourinho needs 100 or 200 million pounds ($327 million) to spend on players wherever he goes, Arsene Wenger doesn't.
"But someone else has got to come in and help Arsene and his number two Pat Rice and say, 'You need a goalkeeper and a centre half' -- it doesn't take Einstein to work that out.
"If the fans can see that how can one of the top managers in world football not see that?".
Merson, who has been divorced twice and has five children, is still fighting his own demons.
In his book, published by Harper Collins, he apologises for his past behaviour and confronts the seriousness of his indiscretions in chapters like, 'DO NOT
