The 19-year-old leaves Lorient having made 30 appearances in the senior setup, and Emery is delighted to have secured a deal for the youngster.
The Gunners manager told the club's official website: "We are delighted Matteo is joining us. He is a talented young player and a lot of clubs were interested in him.
"He has big potential and gained good first-team experience last season with Lorient. He wants to learn and improve and will be an important part of our first-team squad."
Guendouzi spent part of his youth career at Paris Saint-Germain before making the switch to Lorient in 2014.