The 29-year-old returns to the Emirates Stadium five years after leaving the club for AC Milan, and Gunners boss Arsene Wenger is delighted with the transfer.
Wenger told the club's official website: "We're very pleased that Mathieu has agreed to rejoin us.
"He is a player of real quality, with a fantastic work-rate and great mentality. As we know, Mathieu is a strong midfielder, but is also comfortable playing in defence too. He is a very good addition to our squad."
Flamini, who made 153 appearances in his previous spell with the club, has signed a two-year deal.