Walcott has also bagged a £3m signing-on bonus as part of the agreement.
Theo Walcott At Arsenal
(01 of14)
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Signing in January 2006
(02 of14)
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Beginnings
(03 of14)
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Admiring the Emirates
(04 of14)
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Debut vs. Villa, August 2006
(05 of14)
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First goal vs. Chelsea, 2007 League Cup final...
(06 of14)
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And savouring the moment
(07 of14)
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A first north London derby goal in 2008
(08 of14)
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A classy double vs. Birmingham
(09 of14)
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An all-too-rare showing of his dribbling prowess vs. Liverpool in the 2008 Champions League quarter-final
(10 of14)
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Beating Cech again, but losing to Chelsea 2-1 again in the 2009 FA Cup semi-final
Arsenal v Leeds United - FA Cup Third Round(11 of14)
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LONDON, ENGLAND - JANUARY 09: Thierry Henry (R) of Arsenal shares a joke with team mate Theo Walcott (L) as they warm up before the FA Cup Third Round match between Arsenal and Leeds United at the Emirates Stadium on January 9, 2012 in London, England. (Photo by Clive Mason/Getty Images) (credit:Getty Images)
(12 of14)
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From jeers to cheers: scoring twice in a make-or-break match against Spurs
Reading v Arsenal - Capital One Cup Fourth Round(13 of14)
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READING, ENGLAND - OCTOBER 30: Theo Walcott of Arsenal celebrates after scoring their sixth goal during the Capital One Cup Fourth Round match between Reading and Arsenal at Madejski Stadium on October 30, 2012 in Reading, England. (Photo by Scott Heavey/Getty Images) (credit:Getty Images)
Arsenal v Newcastle United - Premier League(14 of14)
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LONDON, ENGLAND - DECEMBER 29: Theo Walcott of Arsenal holds the matchball after scoring a hatrick during the Barclays Premier League match between Arsenal and Newcastle United at the Emirates Stadium on December 29, 2012 in London, England. (Photo by Clive Mason/Getty Images) (credit:Getty Images)
The England forward had entered into the last six months of his deal, with Liverpool and Chelsea both reportedly keen to sign him on a free transfer in the summer.
In the past two years Arsenal have been forced to sell Samir Nasri and Robin van Persie to Manchester City and Manchester United after the pair entered the last year of their contracts and indicated they would not be extending their stay with the Gunners.
Walcott was 16 when he joined Arsenal from Southampton seven years ago and has scored 56 goals for the club.
He did not make his debut until August of 2006 and hit his first Arsenal goal in the 2007 League Cup final against Chelsea.