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The 24-year-old Norway midfielder joined the Gunners from Real Madrid initially on loan in January 2021 before signing a permanent four-year deal that August, with a club option to extend his stay for a further 12 months.
Odegaard has made 112 appearances for Arsenal in all competitions, scoring 27 goals and providing 15 assists.
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Odegaard said: “Signing a new contract was a really easy decision for me for lots of reasons. Mainly what we are doing right now as a club is special and I want to be a part of that.
"I'm really excited for what’s to come here. I've found a place where I can be really settled and call my home.
"My story is a bit different maybe as I moved around different clubs since I was 16. At Arsenal, since the first day, I've felt great and this is definitely my home now.
"I just want to say thanks to everyone working at the club and of course, our fantastic supporters. I will continue to give everything to bring success to this club in the years to come.”
Speaking at a press conference ahead of the north London derby at home to Tottenham on Sunday - live on Sky Sports - Mikel Arteta said of Odegaard's new deal: "It's great news for the club and great news for the team.
"I'm really happy for him. It just shows there are many ways to make it. At the end it's about finding a place where you are comfortable and valued and you can express your talent. He's loved by everybody.
"At a very early age he had huge expectations. He made his debut with the national team at 15, he played with five different teams in three different countries and that's a lot. Martin is who is he is today because of what he's been through in those years.
"You notice him around the building all the time because he's doing the right things. When he needs to get into fun, he's quite funny. I'm really happy to have him as a captain."
Edu, Arsenal's sporting director, said: "To agree and complete a new contract with Martin is such great news for us all. He is our captain, an experienced international and a player who gives us so much quality and joy every time he plays for us.
"Martin is still only 24 years old so there’s still much more to come from him, and we're delighted that we will be together in the forthcoming years.
"Our aim is to keep our best players and with Martin now also included we're pleased to have completed new long-term contracts with a number of our most important young players in recent months.”
Analysis: Odegaard deal underlines Arsenal efficiency
Sky Sports' Nick Wright:
First Gabriel Martinelli, then Bukayo Saka and William Saliba, and now Martin Odegaard. In the space of nine months, Arsenal have tied arguably their four most important players to long-term deals.
Their efficiency off the pitch has been key to their recent progress. A few years ago, Arsenal's approach to these matters was chaotic at best, with poor decisions and ill-conceived squad building leaving them cancelling a string of contracts to get players out.
Now, with manager Mikel Arteta and sporting director Edu fully-aligned and enjoying the full support of the club's owners, the outlook is transformed. Arsenal have a young, vibrant squad and, crucially, they look set up for long-term success.
It is not just Martinelli, Saka, Saliba and Odegaard. Across Arsenal's entire squad, there are only six players whose contracts expire in the next two years and none of them are considered key.
In other words, Arsenal have got everyone they view as part of their long-term future signed up. Gone, it seems, are days of being forced to cash in on players winding down their deals. Arsenal's re-emergence as a force on the field owes a lot to their progress off it.