Switzerland midfielder Xhaka reacted to ironic cheers and then jeers when he was substituted against Crystal Palace last month, appearing to shout expletives in the direction of the supporters before sarcastically applauding. He then removed his shirt while leaving the field and headed straight down the tunnel.
The 27-year-old, who has not played for Arsenal since and is not in the Gunners' squad for Wednesday's Europa League clash with Vitoria SC, had been named his club's captain in September following a player vote.
However, head coach Unai Emery has confirmed Xhaka will no longer captain Arsenal and striker Pierre-Emerick Aubameyang will take the armband instead.
"I have spoken to Granit and he is no longer one of the captains in the group," Emery said at a news conference to preview Wednesday's game.