Xhaka ends a seven-year stay in North London and returns to the Bundesliga, where he previously starred for four seasons for Borussia Monchengladbach.
Xhaka leaves Arsenal on a high after scoring nine goals and laying on eight assists in his final season with the Gunners but there were some difficult moments along the way.
Shortly after being given the Arsenal captaincy early in the 2019/2020 season, Xhaka was involved in an angry confrontation with the club's fans and had the armband taken away from him.
He leaves Arsenal as a two-time FA Cup winner and 297 appearances to his name, scoring 27 goals in total.
"Gunners, it's been some journey - and all that's left is for me to say thank you," he wrote on Instagram.
"I've spent seven years at Arsenal. The club has become such an important part of my life - and it's not easy to leave. But now is the right time for a new adventure.
"There are so many people I need to thank - the managers I played for, all my team-mates and the staff behind the scenes.
"And I especially want to thank all of you. Everyone knows we've been through some tough times. But we came through them together - and I'll never ever forget the feeling I had each time we won the FA Cup or whenever I heard you singing my name. Pure goosebumps!
"I will always carry Arsenal in my heart. Once a Gunner, always a Gunner."