The Spaniard joined Arsenal in 2019 and guided the club to their first Premier League title in over 20 years last season.
The Gunners have also enjoyed a strong start to the current campaign and sit second in the league having won four of their first five games.
Arteta's time at the Emirates has seen him take charge of 361 matches, boasting a win rate of 62.05 per cent - the best of any permanent boss in Arsenal's history.
“It's a privilege to commit my future to the club and to continue to work with exceptional people who want the best for Arsenal. This club is unique, its character and the way it makes you feel, and I have a great sense of privilege that our journey together will continue," Arteta said.
“We have already built a special bond and created memories that will last a lifetime, and what is so exciting is that this is only the beginning of what we can achieve together.
"I'm extremely grateful to Stan and Josh (Kroenke, co-Charimen) for their trust and support, and feel honoured to be leading this club through such a special period in its 140-year history.
“This is such a proud moment for me and my family. I feel the love and respect from our fantastic supporters, and they have mine – and ours – in return.”
Arsenal have also confirmed that Arteta's backroom staff have signed new deals, aligning with the duration of the manager's new contract.