The France-born attacker was heavily linked with a move to Napoli, who reportedly met Les Dogues' extravagant valuation of the player before he opted instead for a Premier League pilgrimage.
"Signing a top-class winger has been one of our key objectives in this transfer window and I'm delighted he's joining," manager Unai Emery said. "He will add pace, power and creativity, with the aim of bringing more goals to our team."
A right-sided winger, Pepe guided Lille to a surprise second-place finish this past campaign. His 22 goals were second only to Kylian Mbappe, and his 11 assists were also runner-up in France's top flight. The 33 combined goals and assists were the fourth most in Europe's top-five leagues behind Lionel Messi (49), Mbappe (40), and Fabio Quagliarella (34).
Pepe's signing smashes Arsenal's club-record £56-million move for Aubameyang and is the Gunners' third major recruitment of the summer following the acquisitions of William Saliba, Gabriel Martinelli, and Real Madrid loanee Dani Ceballos.