The Spanish manager's existing contract is due to expire at the end of the campaign, but negotiations over a new agreement have been underway for several months. BBC Sport reported earlier this month that talks were progressing well, and an agreement has now been reached.
The length of Arteta's new contract has not been confirmed, but the deal is expected to keep him at Arsenal for at least 10 years since he joined the club as manager in December 2019.
The new agreement will also significantly increase Arteta's earnings. His current salary of £10 million per year, along with a further £5 million in potential bonuses, is expected to rise under the improved terms.
Arteta recently addressed speculation surrounding his future, telling supporters there was no reason to worry because he wanted to remain at Arsenal.
"I'm extremely happy and I feel very grateful to work with the people I work with," he said.
The agreement represents an important moment for Arsenal as the club continues to build on its progress under Arteta. Since taking charge in 2019, he has overseen a significant transformation of the team and established Arsenal as a consistent contender for major honours.
Arsenal ended a two-decade wait for the Premier League title by winning the competition last season, marking a major milestone in Arteta's tenure.
The club also came close to winning the Champions League, falling just short of securing their first European title in the competition. That disappointment has provided further motivation as Arsenal look to compete for more silverware.
Arteta has repeatedly expressed his desire to continue working with the squad and staff he has helped develop. His decision to remain gives Arsenal continuity as they seek to build on their recent achievements.
The new contract also provides greater certainty around the club's long-term plans, with Arteta set to continue leading a team that has developed into one of Europe's leading sides.
With the agreement now in place, attention will turn to what Arsenal can achieve in the coming seasons under Arteta's leadership. The manager has committed his future to the club and will now look to add further success to his growing record in north London.
