No fee for the deal, which will keep Smith Rowe at Craven Cottage until the summer of 2029, with a club option to extend by a further 12 months, was disclosed.
But the BBC estimated the total value of Smith Rowe's move from north to southwest London could be worth £27 million ($35 million, 32 million euros), plus £7 million in add-ons, with a total of £34 million representing a Fulham transfer record.
The 24-year-old joined Arsenal's academy aged just 10 and rose through the ranks to make 115 senior appearances for the Gunners in all competitions.
But he found game time hard to come by last season as Arsenal finished runners-up to Premier League champions Manchester City, with Smith Rowe pleased to have made the move to Fulham.
"I'm finally here, so I'm really happy for me and my family -- it's a good moment," he told FFCtv.
"I'm really excited, I just wanted to get here as quickly as possible so I could get going with my team-mates."
Fulham finished 13th in the 20-strong Premier League last season but Smith Rowe added: "Listening to the project, speaking to the manager (Marco Silva) and seeing what players we have here already, I think it's an exciting project for me and definitely the perfect step for my career going forward."
Arsenal manager Mikel Arteta praised Smith Rowe's attitude, telling the Gunners' website: "I'm sad that Emile is leaving us but excited for him to take this new opportunity at this stage of his career, when he needs to be starting matches and playing regularly."
