The clubs have reached an agreement on a deal reported to be worth £30m for the Switzerland central midfielder.
Xhaka, 23, has flown to London to finalise personal terms and have a medical, scheduled for this weekend.
His arrival will strengthen a midfield depleted by the departures of Mikel Arteta, Tomas Rosicky and – possibly – Mathieu Flamini.
Xhaka will become Arsenal’s first acquisition in what is expected to be a busy transfer window at the Emirates Stadium.
