Arteta was appointed as Unai Emery's replacement in December 2019 and has brought renewed optimism during his spell in charge.
The 40-year-old has won the FA Cup and Community Shield since taking over at the Emirates Stadium.
Arteta has got Arsenal challenging at the top end of the Premier League this season as they seek to qualify for the UEFA Champions League for the first time since 2017.
The Gunners occupy fourth position on the table, two points ahead of fifth place Tottenham Hotspurs, with four games remaining.
"I'm excited, grateful and really, really happy today," Arteta said.
"When I spoke to Josh [Kroenke] he could see the club at the same point and he wanted to take the club the way I wanted to do it. So everything that he's said, and that Stan has said when I've been together with both of them, they've always delivered.
"We want to take the club to the next level and to compete really with the top teams. In order to do that, we have to be playing in the Champions League. We have to be able to evolve the team, improve our players, improve all departments, generate even more connection with our fans, improve the atmosphere at the Emirates, be able to recruit top, top talent and the best people for this club to drive this project to that level."
