"David has huge experience and I look forward to working with him again," Arsenal head coach Unai Emery said in the club release. "He is a well-known player and adds to our defensive strength."
Luiz departs Stamford Bridge three years on from returning to Chelsea for his second spell at the club and just three months on from signing a contract extension to 2021.
Luiz has won the Premier League, UEFA Champions League, UEFA Europa League and FA Cup during his time at Chelsea, and he also won two Ligue 1 titles while at Paris Saint-Germain between 2014 and 2016.
The 32-year-old is an experienced operator and should be a fine replacement for Laurent Koscielny in Arsenal's centre-back department.
The departure of Koscielny to Bordeaux earlier this week was a big blow for Arsenal.
As the club captain and senior centre-back, the Frenchman was one of the key players in Arsenal's squad, especially given that their defence has been weak for some time now.
Signing Luiz should go a long way toward making up for his exit, and with Kieran Tierney now also on the books at the Emirates following his move from Celtic, Arsenal's back line looks in much better shape than a few days ago:
Henry Winter @henrywinter
When all fit and up to speed, #afc defence of Bellerin, David Luiz, Holding, Tierney in front of Leno looks more than decent and certainly worth watching. Fans long calling for defence to be properly reinforced so Luiz (short-term sense) & Tierney make it a window with good views
Luiz is not a long-term solution to Arsenal's issues at the back because he is past his prime.
He should still provide the Gunners with a couple of seasons of stability, though, after starting 36 of Chelsea's 38 Premier League games last term.
The Brazil international had a reputation earlier in his career for unpredictability and rashness. But he has become a much more stable presence in the centre of defence, and he will be a valuable asset for Emery to call on in the 2019-20 season.