The 19-year-old midfielder last season on loan with MVV Maastricht where he scored two times in 29 leagues in the Eerste Divisive.
Nwakali joins the list the top Nigerians to feature for the Venlose Trots - Tijjani Babangida, Ahmed Musa, Michael Uchebo and Uche Nwofor.
The former Golden Eaglets skipper will await his final residential and work permit in Netherlands before making his debut for the De Koel Stadium outfit.
Maurice Steijn’s men are currently placed eight in the Dutch Eredivise having two games, in their opening three games this campaign.
"VVV-Venlo and Arsenal have been working on a rental agreement that is being completed today. The clubs had agreed on the rental of Nwakali for a long time, but obtaining the necessary documents for his transfer took some time," the statement reads on the club's website.
"In the coming days, Nwakali will receive the final residence and employment permit. After receipt of the employment permit, Nwakali may come to our club."