Arteta's deal was due to expire at the end of the season and negotiations over an extension had been ongoing for several months.
Arsenal co-chair Josh Kroenke said in May that securing Arteta's future was the club's priority after the Spaniard guided the North London side to their first league title in 22 years last season.
Arteta reiterated his commitment to the club this year amid speculation over his future.
The 44-year-old Spaniard has transformed Arsenal since taking charge in 2019, ending the club's long wait for a Premier League crown last season after three runners-up finishes in a row.
Arsenal have made a strong start to their title defence, winning their opening four league matches before suffering a 3-0 defeat by Brighton & Hove Albion on Saturday.