The 27-year-old attacking midfielder becomes the third new arrival at the Emirates Stadium this summer, following in the footsteps of Lukas Podolski and Olivier Giroud.
Confirmation of the transfer ends a saga where the move had been cast into doubt due to uncertainties over the Spanish club’s ownership situation.
The transfer fee for Cazorla is officially undisclosed but Goal.com understands that the move will cost the Gunners around £18 million.
"I'm so happy to be joining Arsenal," the Spain star told his new team's official website.
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"I'm so excited to be joining one of the greatest teams in Europe and also in the Premier League. I will do my best to help Arsenal challenge for trophies and make all the supporters happy."
Manager Arsense Wenger was also delighted after seeing the move finalised, hailing the ex-Villarreal man as a great player who will add significant quality to his squad for the new season.
"Santi Cazorla is a great signing for us," he said. "He is a player with good experience at both club and international level, who will add significant quality to our squad.
"He is a versatile, attacking midfield player who can play comfortably on either side of the pitch or centrally.
"He has good pace, is technically gifted and will be a huge asset to Arsenal. We are delighted that he is joining us."
Arsenal are currently in Germany for a pre-season training camp and have been joined by captain Robin van Persie - a player still subject of intense transfer speculation - as they prepare to open their Premier League campaign against Sunderland on August 18.