Premier League: Stoke City 1 Arsenal 0
Arsene Wenger's men have now won just once in their last 10 trips to Stoke in all competitions and sit four points behind leaders Chelsea thanks to a Walters penalty 14 minutes from time.
Having bounced back from defeat to Bayern Munich in the UEFA Champions League with an impressive 4-1 win over Sunderland last week, Wenger's charges struggled to recapture that form at the Britannia Stadium.
After Peter Crouch missed a handful opportunities, Walters ensured his side added to their home scalps of Chelsea and Manchester United, extending Arsenal's winless run on the road to three matches in the process.
Mark Hughes' side are now six points above the bottom three after recording their first Premier League win since February 1.
In a closely fought opening, Walters glanced a header just wide of Wojciech Szczesny's right-hand post with 15 minutes gone but saw the flag raised for offside, and Santi Cazorla curled an effort high and wide at the other end.
The two clubs have endured a fractious relationship in recent years and that was in evidence once again as a series of fouls frequently halted play, while clear-cut chances remained conspicuous by their absence.
But Stoke began to assert their dominance after the half-hour mark. Steven Nzonzi, called up for the injured Peter Odemwingie, saw his cross deflected into the path of Crouch, whose shot rippled the side netting.
Glenn Whelan was then perhaps fortunate to avoid a booking from referee Mike Jones when he appeared to catch Olivier Giroud's knee in a challenge eight minutes from the break, before Jack Wilshere almost got on the end of Giroud's throughball.
Fortunately for the hosts, the Frenchman's pass was a touch too strong, with just enough time remaining in the half for Whelan to test Szczesny from distance.
Crouch fired an acrobatic effort wide of the Arsenal goal within six minutes of the restart and he should have opened the scoring shortly after when he failed to divert Charlie Adam's cross past Szczesny.
In a rare Arsenal burst, Wilshere looked set to break through the hosts' defence but the Stoke backline stood strong to deny the England international as they continued to stifle Arsenal's creativity.
After Crouch went close again with a header from Adam's cross, Geoff Cameron fired wide from inside the area - with Wenger opting to introduce Mesut Ozil from the bench in an attempt to offer a threat of their own.
However, Stoke seized on their best opportunity of the match after 76 minutes when Laurent Koscielny handled Walters' flick inside the penalty area.
The Republic of Ireland international calmly stroked the ball home to hand the hosts the lead and, while Ozil fired an effort wide eight minutes from time, it was not to be as Arsenal's Stoke hoodoo continued.