The former Gunners and Everton midfielder was due to see his current terms expire at the end of the 2024-25 campaign, and his stellar work in North London caught the eye of some of his former clubs.
Arteta was heavily linked with a return to Barcelona to replace the departing Xavi last season, but he was quick to shoot down reports claiming that he had expressed a desire to re-join the Catalan giants.
Manchester City - who are apparently resigned to losing Pep Guardiola when his own deal runs out in 2025 - were also said to have been considering a reunion with their former assistant head coach should Guardiola indeed depart next summer.
However, the Arsenal boss recently confirmed that talks over a new contract were set to ramp up once the transfer window closed, and according to The Athletic, he has now reached an agreement to extend his terms.
Three more years! Arsenal repeat Odegaard trick as Arteta 'agrees' new deal
Arteta 'to stay at Arsenal until 2027'
The report claims that the Spaniard has agreed to stay on in North London for another two seasons beyond the end of the current campaign, thereby keeping him at the club until the summer of 2027.
Confirmation of Arteta's new contract should arrive in due course, and news of the Spaniard's renewal comes just a couple of days before the first North London derby of the campaign.
The Gunners did something similar last year before hosting Tottenham Hotspur in September 2023, announcing a new deal for captain Martin Odegaard in the build-up to their clash with their bitterest rivals.
Arteta was hired to replace Unai Emery in late 2019 and has masterminded Arsenal's rise from mid-table strugglers to Premier League title challengers, winning 142 of his 234 matches in charge.
The 42-year-old has also collected three pieces of silverware with the Gunners, winning one FA Cup and two Community Shields, while also ending their seven-year exile from the Champions League.
How big a boost is Arteta's new contract?
A massive one. No Gooner should have been too concerned about the prospect of Arteta leaving right in the middle of his Emirates project, but confirmation of this agreement will extinguish any shred of uncertainty.
Pipping Manchester City to the post has proven a largely fruitless quest so far, but Arteta has taken the Gunners closer and closer to his former club every season, all while reverting Arsenal to the free-flowing attacking force that scores goals for fun.
The 42-year-old's eye for talent in the transfer market has often proven unparalleled too, and it is evident that the current Arsenal crop love playing for a manager as hungry, tactically astute and passionate as he is, even if that passion sometimes lands him into trouble with the officials.
What is more, Arsenal fans have been crying out for a slice of good news after a miserable international break, in which captain Odegaard and defender Riccardo Calafiori sustained ankle and calf injuries respectively.
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