Martinelli is the second promising Arsenal teenager to secure their future at the club this week, following Bukayo Saka who signed a new deal on Wednesday.
The 19-year-old signed from Brazilian club Ituano last summer and has impressed in his debut season, before injury cut it short, after scoring 10 goals in 26 appearances.
Arsenal head coach Mikel Arteta said: "I am very happy that Gabi has signed a new contract with us. He is a very talented young player and he has impressed us with his performances, attitude and work-rate
Martinelli made an instant impact in English football netting four goals in his first two appearances in the League Cup and he also scored three goals in the Europa League group stages.
His first Premier League goal came against West Ham on December 9, he then scored in back-to-back matches in January including a tremendous solo effort against Chelsea at Stamford Bridge.
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