After serving as a director and general manager with Corinthians and the Brazilian national team, Edu will perform a similar role at Arsenal.
The north London side said Edu will "oversee the constant building up and efficient strengthening of our squad."
Arsenal were reportedly looking to hire Monchi to the freshly minted role, but the Spaniard opted to return to Sevilla as their transfer guru.
"We're very excited that Edu is joining the team," Raul Sanllehi, Arsenal's head of football, said in a statement. "He has great experience and technical football knowledge and, most importantly, is a true Arsenal man. He understands the club and what we stand for to our millions of fans around the world.
"His arrival is the final and very important part of the jigsaw in our development of a new football infrastructure to take us forward. He will be working closely with Unai Emery and the first-team coaches and will play a relevant role leading our football vision and ensuring we have - and follow - a solid philosophy through all our football activities."
Edu played for the Gunners from 2001-05, including during the 2003-04 campaign that saw the club go undefeated in the Premier League.