City announced this week that Aguero will leave the club at the end of the season when his current contract runs out.
The 32-year-old Argentina international striker has not been offered a new deal by the former Premier League champions and will not be at the Etihad Stadium beyond the summer of 2021.
Aguero has been on the books of City since 2011 and has won the Premier League title four times and the EFL Cup on five occasions so far.
Arteta worked with Aguero when he was a coach at City, and the Arsenal boss has raved about the former Atletico Madrid striker.
The Spaniard told Arsenal’s official website: “First of all, I think that anybody that has been close to Sergio would say the same thing. I think he’s been probably the main face, or one of the main three faces that have lifted that project.
“You need some ability, you need some quality players to create moments to start to build a project like they did and Sergio was probably the biggest face on the project.
“Not only the way he plays, his charisma, his personality, the way he is. He’s loved by everybody at that club. It’s sad to see someone leaving like him but I think with what he’s done, he’ll be there for history.
“Sergio has a unique quality to see spaces that nobody else can see and to score goals in a really easy way so I’m sure that he will find the right next chapter for him.”