The 28-year-old travelled to London from Germany on Tuesday ahead of the move, but had to wait until Wednesday to undergo a medical before finalizing the deal.
His fee surpasses that of Liverpool’s Egypt forward Mohamed Salah, who until on Wednesday was the most expensive African footballer, having cost the Reds around £34.3 million.
Aubameyang, who has scored 21 goals in 23 appearances for Dortmund in all competitions this season, had been linked with a move to the Premier League after topping the goalscoring table in the Bundesliga last season.
The Gabonese star came third in the Confederations of African Football (CAF) African Footballer of the Year awards, behind Liverpool duo Mohamed Salah [Egypt] and Sadio Mane [Senegal].
Dortmund’s sporting director Michael Zorc praised Aubameyang for his contribution to the German side
“In this team he performed superbly for Borussia Dortmund and scored many important goals and was part of the team that won the German Cup in 2017. We wish Pierre-Emerick all the best for his future at Arsenal.”
While at Dortmund, the Gabonese won one DFB-Pokal and DFL-Supercup.
He was named the Bundesliga Player of the Year for the 2015/16 season.
He joins an Arsenal side that has dipped in form, having won only three in 11 PL games, recording only one victory since the turn of the year.
The North London side currently lies sixth in the PL table, 23 points behind leaders Manchester City and eight points behind fourth placed Liverpool.