Luiz joined Arsenal from Premier League and London rivals Chelsea in the summer of 2019.
The Brazilian defender has been a big player for the Gunners over the past two seasons, but the former Paris Saint-Germain has had injury problems this season.
Luiz has made 17 starts and three substitute appearances in the Premier League and played seven times in the Europa League for Arsenal this season.
During the 2019-20 campaign, the 34-year-old, who can also play as a defensive midfielder made 32 starts and one substitute appearance in the Premier League and played five games in the Europa League for the Gunners.
Arteta told Arsenal’s official website about Luiz leaving: “He is a player that has won everything in football and has earned every right to do so because of who he is as a player and as a person. I had the privilege to work with him for 18 months, which I really enjoyed.
“We got on really well, we had some great moments together, he has been really helpful, someone that we really like and appreciate so much, so I just say thank you to him and wish him the best of luck in his next chapter because I am sure, knowing David, that he will have many more to come as a player, and in the future, somehow related to the game.”