The 24-year-old underwent a medical at London Colney earlier this week after his representatives finalised a five-year contract with the Gunners.
The Ivorian becomes the third most expensive signing in Premier League history - behind Paul Pogba (£89m) and Virgil van Dijk (£75m) – and breaks the £56m club-record Arsenal spent to bring Pierre-Emerick Aubameyang to the Emirates in January 2018.
Head coach Unai Emery said: "Nicolas is a highly-rated and talented winger who was wanted by many of the top teams in Europe. Signing a top-class winger has been one of our key objectives in this transfer window and I'm delighted he's joining.
"He will add pace, power and creativity, with the aim of bringing more goals to our team."
Arsenal and Napoli both agreed a fee with Lille for the winger but Pepe preferred a move to North London – with the Gunners offering better personal terms - despite the club’s lack of Champions League football.
Arsenal will pay the fee in structured instalments spread out over a number of years, allowing them to successfully manoeuvre their budget in a way which wasn’t possible when making a failed move for Crystal Palace’s Wilfried Zaha.
Pepe scored 22 goals in 38 Ligue 1 matches last season and added a further 11 assists as Lille finished second in the league – the club’s best result since winning the title in 2010/11.
Unai Emery’s side are still expected to remain busy in the transfer window as a push for Celtic defender Kieran Tierney continues, while Shkodran Mustafi and Laurent Koscielny both move nearer towards the exit door.
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