Iwobi, 23, is the Blues’ seventh addition of this transfer window, and has signed a five-year contract at Goodison Park.
The move was not sealed before the 5pm BST deadline on Thursday, but papers were lodged to the Premier League to allow for an extension to enable the deal to be concluded.
After the deal was eventually confirmed at 9:15pm BST, Toffees manager Marco Silva told Everton’s official website he is delighted to have signed Iwobi, saying:
“Alex was one of our main targets for this window and I believe he is a fantastic signing for Everton. He is a direct and skilful winger and attacking midfielder who always works very hard for his team.
“He is still young but already with a lot of top-level experience – 100 Premier League matches, more in Europe and many international games.
“It was important for me to have one more quality option for our attacking positions to add to what we have with Richarlison, Bernard and Theo Walcott.
“Alex fits exactly the profile of player I want in my model. He is hungry to join Everton and take the next step in his career, to help us compete with the strongest teams in the league and reach his potential at our club.”
The signing of Iwobi comes after news that Crystal Palace forward Wilfried Zaha, who Everton had already bid for this summer, would be staying at Selhurst Park despite submitting a transfer request.
Nigerian international Iwobi has spent his entire career at Arsenal, scoring 15 goals in 149 appearances for the Gunners.