Arsenal have agreed to pay $6.5 million (3.4 million pounds) for Brazilian midfielder Denilson, his club Sao Paulo said on Friday.
The deal with the Premier League club had been finalised on Thursday afternoon, Sao Paulo said on their official Web site.
They said was likely that the player, full name Denilson Pereira Neves, would be loaned to a smaller European club to gain experience.
Denilson, who came through the ranks at Sao Paulo, has played only a handful of first team games and is not a regular.
He captained Brazil at under-17 level and played in the team that finished runners-up to Mexico at the world under-17 championship in Peru last year.
He was called up for Brazil's under-20 team for the first time in June.