Kolasinac will officially become an Arsenal player on July 1 when his contract at Schalke expires, joining the Gunners on a long-term deal.
German news outlet Bild claim the Bosnia international has agreed a deal worth £7.5million a year to join the north London club.
The 23-year-old will become Arsenal's first summer signing when he completes his move, as manager Arsene Wenger looks to add to his squad to launch a sustained bid to win the title.
Arsenal announced the 23-year-old's arrival on Twitter: "It’s official – @seadk6 is a Gunner! #WelcomeKolasinac"
Arsenal confirm Sead Kolasinac arrival
— Arsenal FC (@Arsenal) June 6, 2017
Arsenal confirm Sead Kolasinac signing
And a club statement read: "Sead Kolasinac will join us this summer on a long-term contract.
"Subject to the completion of all regulatory processes, the defender will start pre-season training in July."
Kolasinac came through the ranks at Schalke and made over 100 appearances for the Bundelsiga outfit.
The left-back's his arrival will throw into doubt the future of Kieran Gibbs, who has yet to negotiate fresh terms at the Emirates Stadium.
Wenger, as well as chief executive Ivan Gazidis and majority shareholder Stan Kroenke, has targeted a run at the Premier League crown next season.
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Arsenal line-up next season with Sead Kolasinac Tue, June 6, 2017
Click through the gallery for a possible Arsenal line-up next season including Sead Kolasinac
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GK: Petr Cech
Sead Kolasinac made over 100 appearances for Schalke
But Arsenal fans shouldn't expect a host of signings this summer after Wenger admitted he is only in the market for a couple of top-quality additions.
"I think this group of players is good enough to come back," the Gunners manager said.
"They have learned a lot and they have gone through difficult periods this season and they have bounced back in a very strong way. I think that will help them, absolutely, next season.
"But first I think we have to keep 90 per cent of these players together and find one or two more who strengthen the group but we don’t need a lot.
"We don’t need many. But we need maybe top quality."