Nketiah, 23, has been with Arsenal for eight years and has made 92 first-team appearances, scoring 23 goals.
He will wear the No. 14 shirt which has been previously worn by Theo Walcott, Pierre-Emerick Aubameyang and Thierry Henry.
"I'm delighted Eddie is staying with us. He represents what we are all about and all the values of the club," Arsenal coach Mikel Arteta said in a statement.
"We are very happy that he has extended his contract and now we have to get to work and continue to develop the great talent and person that we have in him."
He has yet to earn a senior cap but is England's Under-21s all-time top scorer with 16 goals in 17 appearances.
Arsenal have already signed U.S. goalkeeper Matt Turner from New England Revolution and teenage Brazilian forward Marquinhos this summer. Alexandre Lacazette left the club to join Lyon at the end of his contract.
Just getting started...— Arsenal (@Arsenal) June 18, 2022
We're delighted to announce @EddieNketiah9 has signed a new deal ✍️
"The foundations of this squad are built on young talent and in particular those who have come through our Academy system," technical director Edu said.
"Eddie was released by another club as a young man but has always shown he has the attitude as well as the ability to become a top player. The fact he's signed a new contract is an important part of our squad planning for next season and we're all delighted."