Despite the transfer window closed for business, the deal was ratified by the Premier League because a deal sheet was submitted before the 17:00 hours deadline.
Iwobi who joined Arsenal since he was seven years old signed a five-year contract, keeping him at Everton until at least June 30, 2024.
The transfer fee Everton paid for Iwobi is around £40 million (Around N17 Billion) – , making him the most expensive player of Nigerian descent in history.
Iwobi became the most expensive Nigerian player to date, toppling Kelechi Iheanacho, who joined Leicester City for a record-breaking £25 million two years ago (over N11 billion).
Everton manager Marco Silva said: “Alex was one of our main targets for this window and I believe he is a fantastic signing for Everton. He is a direct and skilful winger and attacking midfielder who always works very hard for his team.
“He is still young but already with a lot of top-level experience – 100 Premier League matches, more in Europe and many international games.
“It was important for me to have one more quality option for our attacking positions to add to what we have with Richarlison, Bernard and Theo Walcott.
“Alex fits exactly the profile of player I want in my model. He is hungry to join Everton and take the next step in his career, to help us compete with the strongest teams in the league and reach his potential at our club.”
Iwobi, the nephew of Nigerian legend Jay-Jay Okocha, was born in Lagos, Nigeria before moving to England when he was four. Iwobi played 149 games for Arsenal, scoring 15 times and contributing to 42 goals.