Cazorla is a potentially pivotal signing having played a key role in Malaga’s first fourth-placed finish in La Liga last season, scoring nine goals in 38 league appearances.
The Spain international, who can play on either wing or through the middle, was a member of the squad that won the European Championships in June, as well as in 2008.
The 27 year-old spent the majority of his career at Villarreal, where he was named Spanish player of the year in 2007. After making 181 appearances for the Yellow Submarine, he moved to Malaga last season.
"I'm so happy to be joining Arsenal. This is a club with great players, a fantastic stadium and huge support," said Cazorla, who has 45 international caps.
"The club has one of the best managers in football and their style of play is recognised and admired all over the world.
"I'm so excited to be joining one of the greatest teams in Europe and to be playing in the Premier League.”
The transfer has been lauded by former Arsenal captain Cesc Fabregas, who helped persuade his international team-mate to move to North London.
Fabregas described Cazorla as a “special player and a top guy” and the winger also spoke to other players with Premier League experience before deciding to join the Gunners.
“I have spoken to Robert Pires because he played with me at Villarreal,” said Cazorla. “Obviously he knew about the rumours of me coming here and always encouraged me to sign.
“He told me it was a very good club and I was going to enjoy London, the city and the move.
“The same with Cesc Fabregas. He said this was a big club and that I was going to be very happy here, he said I would adapt easily. And I can feel that.”
“It is clear that there are players like Silva, Mata, Torres and Reina who have been here a long time, so I also talked to them. They have told me that it is great to play in the Premier League, they told me how the games are in England.
“They say it is different to Spain and that is true. You see Spanish players doing well here and that inspires you to come over as well. They have set an example and I hope I will adapt to the league as well as they have.”
Wenger had been under mounting pressure to spend heavily to improve a squad that finished third in the Premier League last season, 19 points adrift of Manchester City and Manchester United.
Arsenal have not won a trophy since lifting the FA Cup back in 2005 and have seen their best players picked off by bigger spending rivals in recent years, most recently when Gael Clichy and Samir Nasri were poached by City last summer.
Having finished so far off the pace last season, Arsenal have moved to remedy the situation and more new faces could arrive before the close of the window.
Turkey midfielder Nuri Sahin remains a target, after the 23-year-old was told he could leave Real Madrid, as does France youth international M'Baye Niang of Caen.
“Santi Cazorla is a great signing for us,” said Wenger. “He's a player who will add significant quality to our squad.
"Santi has good experience at both club and international level," Wenger said. "He's a versatile, attacking midfield player who can play comfortably on either side of the pitch or centrally. He has good pace, is technically gifted and will be a huge asset to us."
Cazorla’s arrival is likely to pave the way for Andrei Arshavin to join Galatasaray, while Wenger is also keen to offload striker Nicklas Bendtner.
Santiago Cazorla Gonzalez
Age: 27
Previous clubs: Real Oviedo, Villarreal, Recreativo, Villarreal, Malaga.
International Appearances: 45
International Goals: 6
Arsenal Ins
Lukasz Podolski – Cologne – £11m
Olivier Giroud – Montpellier - £13m
Santi Cazorla – Villarreal - £16.5m
Arsenal Out
Gavin Hoyte – Dagenham and Redbridge - Free
Manuel Almunia – Watford - Free
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