The new agreement follows a landmark season in which Arteta became Arsenal's seventh title-winning manager after guiding the club to their 14th championship and fourth Premier League title.
Arsenal co-chairs Stan and Josh Kroenke said they were excited to continue their relationship with Arteta and praised his understanding of the club's values.
“We share a special bond with Mikel. We are so proud of everything we have achieved since he returned to the club in 2019,” they said.
“He has a deep understanding of Arsenal’s values and carries them in his heart. He knows what this club means to everyone connected to it and is committed to building on everything we have achieved together.”
Chief executive Richard Garlick said Arsenal wanted to create a winning era with Arteta and continue working towards the club's long-term ambitions.
“Mikel has the belief, determination and the understanding of what it takes to build something remarkable and enduring here, and we are excited to continue that journey together,” Garlick said.
Arteta said he felt privileged to continue working at Arsenal and described the club as unique.
“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,” 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.”
Arteta added that the new agreement was a proud moment for his family and thanked the Kroenkes and Arsenal supporters for their backing.
“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,” he said.
Arteta has overseen 361 matches in all competitions and has a 62.05 per cent win rate, the best of any full-time manager in Arsenal's history.
His coaching staff have also agreed new contracts aligned with the length of the manager's agreement, subject to completion of the required regulatory processes.