The unheralded Swedish side were handed a dream tie for their maiden appearance in the knockout stages of a European competition, having progressed through a tricky Group J.
Founded in 1996 - shortly after Arsene Wenger had taken charge at Arsenal - Ostersunds have enjoyed a stunning rise under Potter.
The former Stoke City and West Bromwich Albion defender guided the club from the fourth division to the top flight with three promotions in five seasons and will now get the chance to lead his team at the Emirates Stadium.
"Fantastic draw! I wanted to get a really big team," Potter told UEFA.com.
"I think it is really cool to be going home to England and meeting one of the best teams in the Premier League.
"Now we are really underdogs."
3 - Graham Potter has won three of his six Europa League games as a manager (excl qualifiers); the only English managers to have won more in the competition are Roy Hodgson (10/21), Steve McClaren (6/18) and Alan Pardew (4/12). Unfamiliar. pic.twitter.com/KYZ4GlmeFq— OptaJoe (@OptaJoe) December 11, 2017
Ostersunds forward Saman Ghoddos, who scored twice during the group stage, was taken aback by the high-profile draw.
"It is insane. Never in my wildest dreams would I have imagined facing Arsenal in the knockout stages of the Europa League when I signed for Ostersunds," Ghoddos said.
"We drew the best team straight away. Now we will look forward to this match. There will be no chance to just relax during the [winter break], we will be training hard."