The 37-year-old, who made 110 top-flight appearances for Arsenal before retiring in 2016, takes up his first managerial role after three years as Pep Guardiola’s assistant.
Spaniard Arteta, who played for the Gunners from 2011 to 2016, reportedly said his farewells to staff at City on Thursday morning.
Freddie Ljungberg has been in temporary charge of the Gunners since Spaniard Emery was sacked on November 29.
The Swede, who on Thursday afternoon had been expected to face the media at the club’s training ground ahead of Saturday’s game at Everton, has overseen just one victory in his five-match tenure.
Arsenal are seven points adrift of fourth-placed Chelsea and the same number clear of the relegation zone following Sunday’s 3-0 home defeat to Arteta’s current club.
That result led to the Gunners’ hierarchy stepping up their plans to recruit Emery’s long-term replacement, with managing director Vinai Venkatesham pictured outside Arteta’s house in the early hours of Monday morning.
It is understood City are unhappy that Arsenal did not ask for permission to speak to Guardiola’s assistant and are especially annoyed because no approach was made when club officials met for last weekend’s fixture at the Emirates Stadium.
Arteta was in City’s dugout alongside Guardiola on Wednesday night as the Premier League champions won 3-1 at League One Oxford to reach the Carabao Cup semi-finals.