Dani Ceballos impressed for Arsenal in 2019-20, and the Spain international will now spend the 2020-21 season on loan at Emirates Stadium.
Real Madrid have confirmed Dani Ceballos will spend a second consecutive season on loan at Premier League side Arsenal.
The 24-year-old Spain midfielder spent the 2019-20 campaign at Emirates Stadium, though his season was interrupted by a hamstring injury.
Nevertheless, Ceballos still managed to make 37 appearances across all competitions.
He scored two goals for the Gunners, most notably netting a last-gasp winner against Sheffield United in an FA Cup quarter-final.
Ceballos, who signed for Madrid from Real Betis in 2017, then started in both the semi-final against Manchester City and the final against Chelsea as the Gunners secured their 14th FA Cup triumph.
"Dani was an integral part of our team last season and finished the season in excellent form. I love Dani's passion and commitment and he's a highly skilful player," Arsenal head coach Mikel Arteta told the club's official website.
"We're all delighted to welcome him back and we look forward to seeing him pick up where he left off."
Arsenal technical director Edu added: "We're thrilled to have Dani back with us for the new season. We all know his qualities after an impressive 2019-2020 campaign, which ended with him playing a key role in our FA Cup success. We're excited to add Dani to the list of quality players we are bringing in."
Ceballos could soon be joined in north London by Thomas Partey, with Arsenal reportedly interested in the Atletico Madrid midfielder, with some reports stating a deal is close.
Meanwhile, Lucas Torreira has been linked with a return to Italy, with both Fiorentina and Torino said to be interested.