Goal reported in May that 41-year-old Edu would return to the Premier League club, who he played for between 2000 and 2005, after the Copa America.
The former Brazil international now looks likely to be unveiled in north London in the comping days with Brazil having beaten Peru 3-1 in the Copa final on Sunday.
In a statement on Monday, the Brazilian Football Confederation (CBF) confirmed director of football development Juninho – who played for the likes of Atletico Madrid and Middlesbrough – would replace Edu.
"Edu built a story inside the CBF, helped to elaborate a methodology of work and also leaves a winner," CBF president Rogerio Caboclo said.
"I would like to record our thanks.
"Juninho also represents the Brazilian football that lifts trophies. He is a winner on and off the field with a solid career as a manager.
"In those first few months with CBF he proved we were right in choosing him. He did a great job on the development board.
"It was a difficult decision, but we are sure that he will carry out the new role with great success."
During his time at Arsenal, Edu won two FA Cups and two Premier League titles, having been involved in the 2003-04 'invincibles' season.
The former Brazil chief has been a front-funner for the vaccancy at the Emirates since its former occupant, Sven Mislintat, departed at the beginning of this year.
Speaking ahead of a Brazil friendly against Uruguay in October, Edu said: "It will be a great pleasure to go back to the Emirates, a stadium that’s home to a club I’m really fond of.
"I had the opportunity to play for many years with Arsenal and win some important titles.
"So, without a doubt, it will be a pleasure to see the red and white colours of Arsenal again in a stadium that is increasingly becoming more important in the world.
"I remember well that I played my last game alongside great friends like Dennis Bergkamp and other great athletes that were a part of Arsenal’s history.
"And just as I said earlier it will be a great pleasure to come back again now with the Brazilian team. It will be a great honour and I will certainly remember the great moments I had with Arsenal’s supporters."