The Premier League champions confirmed on Thursday that they had exercised their option to buy the 24-year-old, who has signed a five-year contract at the Emirates Stadium.
Reports indicated that Arsenal paid 34.5 million pounds, plus add-ons, to secure Hincapie's services following an impressive debut campaign in North London.
Hincapie played an important role in Arsenal's title-winning season, making 25 Premier League appearances as the club claimed the English top-flight crown for the first time in 22 years. His versatility and consistency helped strengthen Mikel Arteta's defence throughout the campaign.
Before moving to England, Hincapie was a key figure in Bayer Leverkusen's historic 2023-24 season, when the German side won the Bundesliga title without suffering a single defeat.
The defender is currently representing Ecuador at the 2026 FIFA World Cup and has started his country's opening two Group E matches. He is expected to be in action again when Ecuador face Germany later on Thursday.