Thirty-year old Xhaka, signed for Arsenal in 2016 and had a year remaining on his contract, but was expected to leave with the Gunners pursuing a move for England international Declan Rice.
Xhaka returns to the Bundesliga in a reported 25-million-euro switch after a seven-year stint with Arsenal that saw him win the FA Cup twice, but also be stripped of the club captaincy.
He scored 23 goals in 297 appearances for the Gunners, including twice on the final day of the season in a 5-0 home win over Wolves as Arsenal finished second in the Premier League.
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