He is a France youth international, having represented them at under-18, under-19 and under-20 level.
Head coach Unai Emery said: “We are delighted Matteo is joining us. He is a talented young player and a lot of clubs were interested in him. He has big potential and gained good first-team experience last season with Lorient. He wants to learn and improve and will be an important part of our first-team squad."
Guendouzi will wear the number 29 shirt.
The deal is subject to the completion of regulatory processes.