The 45-year-old joins after spending 10 years at Dortmund, where he is credited with discovering the likes of Pierre-Emerick Aubameyang, Shinji Kagawa and Ousmane Dembele among others.
“We are delighted that Sven is joining us," Arsenal manager Arsene Wenger told Arsenal.com.
"Identifying and developing talent is a core part of our philosophy and Sven has an outstanding track record over many years. We look forward to him taking our existing recruitment approach forwards.”
Mislintat will begin his new role in December, and will work closely with Wenger and chief executive Ivan Gazidis.
"Sven Mislintat was my closest colleague for 10 years," Dortmund sporting director Michael Zorc said in a club release.
"A lot of trust has developed during that time. He has worked tremendously for Dortmund. All that was taken into consideration when Sven approached me and asked to be allowed to take the extraordinary offer from Arsenal.
"We did not want to spoil that chance."
The Gunners also confirmed that chief scout Steve Rowley, who has been with the club for more than 25 years, has stood down from his role.
“We would like to thank Steve Rowley for all his hard work over many years for the club," Wenger said.
"He has been a key figure in our recruitment of so many top players and has travelled thousands and thousands of miles, watching hundreds of games for us during his time at the club.
"We wish him well for the future.”