"We're delighted to announce Mikel Arteta is joining the club as our head coach on Sunday," Arsenal said on its website.
The 37-year-old Spaniard, who played for Arsenal from 2011-2016, has spent the last three years as an assistant to Pep Guardiola at two-time defending Premier League champions Manchester City.
"This is a huge honour. Arsenal is one of the biggest clubs in the world. We need to be competing for the top trophies in the game and that's been made very clear to me in my discussions with (team owners) Stan and Josh Kroenke, and the senior people from the club," Arteta said.
"We all know there is a lot of work to be done to achieve that but I am confident we'll do it. I'm realistic enough to know it won't happen overnight but the current squad has plenty of talent and there is a great pipeline of young players coming through from the academy," he added.
Arsenal are currently placed at the 10th in the Premier League, with 22 points from 17 matches. They haven't finished first in the league since 2003-2004 and last hoisted a trophy in 2017, when they won the FA Cup for a record 13th time.
( With inputs from IANS )