The Spaniard is said to have snubbed a late offer from Arsenal to make the move.
The Gunners wanted him to stay in north London to work with the club's academy prospects.
He also reportedly turned down an approach from Tottenham.
Arteta has decided to end his playing career after an injury plagued Premier League campaign.
The 34-year-old has been preparing to make the jump into coaching by taking his badges and working with Arsenal's youngsters.
He and Guardiola are known to be good friends, having graduated from Barcelona's famous La Masia academy together.
The former Everton midfielder has been hotly tipped to have a bright future as a manager.
He could one day return to Arsenal in a coaching capacity, having reportedly left the Emirates on good terms.
