Arsenal have agreed to pay £15million for Southampton winger Alex Oxlade-Chamberlain.
The Gunners are closing in on the England Under-21 international, who travelled to north London on Monday to undergo a medical.
An up-front fee of £12million has been negotiated with Saints but this figure will rise by a further £3million through add-ons, it is understood.
Oxlade-Chamberlain has yet to play at a higher level than League One but his signing will still be viewed as a coup for Arsenal, despite the size of the transfer fee.
"We are delighted that Alex has decided to join us," Arsene Wenger told the club's official website.
"He is an exciting young player who will provide us with creativity and offensive quality.
"Alex is a versatile player who can play in a number of positions.
"He can play as an attacking centre midfielder, or wide left and right.
"Alex is a perceptive passer of the ball and has a great understanding of the game and looks to be a very good team player."
Manchester United and Liverpool also expressed interest in the Southampton academy product, but the Gunners appear to have edged their rivals on this occasion.
"It is one of the biggest deals in Championship history, which sees Saints' previous transfer records blown out of the water," read a statement on Southampton's official website.
Oxlade-Chamberlain, contracted at Southampton until 2013, is regarded as one of England's most promising young footballers.
The 17-year-old, who turns 18 next week, played a key role in helping Southampton secure promotion to the Championship last season, firing nine goals in 34 appearances.
Known for his pace and ability to beat defenders, he can operate on either side of the pitch.
His style has invited comparisons with Theo Walcott, who also left Saints for Arsenal, though Oxlade-Chamberlain is considered to better defensively.
Given his age and lack of experience, it is unlikely he will feature in the Barclays Premier League this season.
His arrival will encourage Arsenal fans desperate for manager Arsene Wenger to strengthen a squad that has consistently fallen short of mounting a serious challenge for the title.
But it fails to remedy the team's defensive frailties, which have been exacerbated by injuries to Thomas Vermaelen and Kieran Gibbs during Saturday's 2-1 defeat by Benfica.
Gary Cahill, Phil Jagielka and Christopher Samba have been linked with moves to Emirates Stadium throughout the summer but with little end result.
Oxlade-Chamberlain is also hardly the experienced, big name player demanded by Arsenal fans seeking reassurance that the club retains ambitions of winning silverware.
Wenger has been frustrated in his courtship of Valencia winger Juan Mata, making Gervinho and Carl Jenkinson the only new arrivals so far this summer.
But Arsenal launch the season at Newcastle on Saturday with Wenger refusing to be despondent.
"We have to stay focused and confident. There isn't any reason to have a bad mood. All we can do is prepare well,'' he told the club's official website.
