The 18-year-old centre-back had offers on the table from Chelsea, Manchester City, Everton, Bayern Munich, Borussia Dortmund, Bayer Leverkusen and Monaco after rejecting Tottenham's contract offer earlier this year.
However, after visiting Arsenal's training ground on Wednesday and holding talks with his family, Upson decided to make the short move across north London to join the Premier League champions instead.
Upson follows a similar path to his father, Matthew, who spent two of his formative years at Luton Town before joining Arsenal for £2million as an 18-year-old in 1997.
The elder Upson went on to make 57 appearances during six years at Highbury, later representing England at the 2010 World Cup and winning 21 caps for his country across a career that also took in spells at Birmingham City and West Ham United.
Upson Jr, also a centre-back, will hope to build a similarly rounded career at Arsenal, having come through Tottenham's academy since the age of seven and featured regularly for their Under-18s last season. He is known for his pace, a trait attributed in part to his mother, former runner Ellie Darby, as well as his composure and strength on the ball.
Arsenal will now look to agree a compensation fee with Tottenham, given Upson is under the age of 24, meaning the north London rivals are due a tribunal-set payment for developing him through their academy system despite his contract having run down.
The move continues Arsenal's active summer in the academy market, following their pursuit of other highly rated young prospects from clubs across Europe.
Upson's decision is expected to sting at Tottenham, where he had been considered a promising defensive prospect in recent years.
Scouts across the continent had been closely tracking his progress before he settled on Arsenal, underlining the level of interest generated by a player yet to make a single senior appearance.