The 37-year-old succeeds former manager Unai Emery, who was sacked as the boss in November.
Arteta has signed a three-and-a-half-year deal with the London club.
The Spaniard is excited to join the club and has voiced his opinion.
Here we look at Arteta's profile.
Arteta to take charge on Sunday
Arteta will take charge as Arsenal boss from Sunday onwards.
That will see Freddie Ljungberg in interim charge for the trip to Everton on Saturday.
The Gunners are 10th in the Premier League with 22 points collected so far.
They are seven points adrift of fourth-placed Chelsea and a potential UEFA Champions League qualifying place.
What did Arteta say after the appointment?
Arteta acknowledged that there is plenty of work to be done.
"We all know there is a lot of work to be done to achieve that but I am confident we'll do it," he said.
"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 academy players coming through."
Here's a look at Arteta's playing career
Arteta started his professional career at Paris Saint-Germain in 2000-01 and went on to be there for two seasons.
He went on to play for Scottish side Rangers (two seasons) and then Real Sociedad for half a season.
Arteta moved to Everton next and played in a total of 209 matches.
He scored 34 goals as well.
In 2016, Arteta joined Manchester City as their assistant coach.
Arteta was offered to lead the Arsenal academy post his retirement as a player, however, he chose to join Manchester City as their assistant coach.
On July 3, 2016, Arteta was given the job at City.
He formed a successful association with manager Pep Guardiola and helped City boss domestic football especially in the last two seasons.
The move helped him learn a lot.
Arteta was pretty much successful at Arsenal
Former mid-fielder Arteta made 150 appearances for the Gunners between 2011 and 2016. He won two FA Cups and two Community Shields. Earlier, he was linked with the club in order to replace Arsene Wenger at the Emirates in 2018. However, the club appointed Emery.
Arteta has to get Arsenal performing at the highest level
Arteta knows he has to change the thinking of the players and get them performing at the highest level.
Things won't happen overnight for the Spaniard here.
The responsibility is huge and Arteta will cherish the job he has on offer.
He knows the club and some of the players well and they now need to buy his philosophy and get working.