The defender, who can play as a full-back or centre-back, has signed a deal that keeps him at Villa Park until the end of the 2024-2025 season.
Chambers, 27, joined the Gunners in a deal reportedly worth £16million in July 2014 having broken into Southampton's first team as a teenager.
But, partly due to injuries, he struggled to establish himself as first-choice at Emirates Stadium, with the 23 Premier League appearances he made in his first campaign comfortably the most he ever tallied in a single top-flight season for the Gunners.
Since then, he has also spent time on loan at Middlesbrough and Fulham in the Premier League, suffering relegation with both.
Chambers had only featured twice in the league for the Gunners this season – both outings came in August as Arsenal suffered defeats to Manchester City and Brentford that produced an aggregate score of 7-0.
The deal is believed to be a free transfer, as Chambers' contract with Arsenal was due to expire at the end of the season.
He becomes Villa's fourth signing of the window after Lucas Digne, Philippe Coutinho and Robin Olsen.