The forward spent last season on loan at Championship side Sheffield Wednesday, scoring twice in 12 appearances for the Owls, but will drop down a division to help the Dons in their promotion push.
The 21-year-old has made 79 appearances for the likes of Reading, Huddersfield and Bolton, having spent most of his career away from his parent club, but had been used by Arsene Wenger during the Gunners' pre-season preparations, scoring in their victory over Boreham Wood.
And Afobe, who will take the number 23 shirt at StadiumMK, says he is looking forward to the loan move and is hoping to add to his competitive goal tally, which currently stands at seven in all competitions.
"I'm really pleased. As soon as I spoke to the manager I knew this is what I wanted to do. It was an easy decision for me," the striker told MK Dons official website.
"I'm a striker who will hopefully score a few goals, I've got good pace and I link to link-up with the midfielders and wingers.
"I'm just really looking forward to getting going now. I just want to play games and help this team out as much as I can."
Arsenal released a statement confirming the move, explaining the youngster was being sent out to gain more time on the pitch.
"Afobe heads to StadiumMK to gain further first-team experience," read the official confirmation on Arsenal's website. "Everyone at Arsenal wishes Benik the best of luck for his time with MK Dons."