Interim boss Freddie Ljungberg "has Arsenal DNA" says club director Josh Kroenke, who revealed Unai Emery's sacking had been discussed for "weeks".
Former Gunners midfielder Ljungberg was promoted from his coaching role after Emery was dismissed on Friday.
"We feel he is the right person in the moment to take the club forward," Kroenke told the Arsenal website.
"We started to fall short of several goals that we set. We still feel we can achieve those goals this season."
Ex-Sweden international Ljungberg, 42, played for Arsenal from 1998-2007, winning two Premier League titles and three FA Cups with them.
He returned to the club in an ambassadorial role in 2013 and after a brief spell on the coaching staff at VfL Wolfsburg in 2017 he rejoined the Gunners in 2018 as Under-23 coach, before being promoted to first-team assistant coach in June.
Ljungberg's first match in charge will be at Norwich on Sunday, with Arsenal in ninth place, eight points off the top four.
"First and foremost, Freddie has Arsenal DNA," Kroenke, son of Arsenal owner Stan Kroenke, said.
"Obviously he was a player here for a number of years, the supporters know him very well and he's worked diligently behind the scenes for the past several years.
"My message to Freddie and the players was let's get back to basics and most importantly let's get back to having some fun.
"I think footballers are at their best when I see smiles on their faces and going out there and winning matches. That's a winning formula to me."
Emery was dismissed after 18 months at the helm following a winless spell of seven games, Arsenal's worst run without a victory since February 1992.
"Like all of our fans and supporters around the globe, we've been concerned about our recent string of performances," Kroenke said.
"We wanted to support Unai and his staff until we decided it was time to make a change and ultimately we came to that decision over the last several weeks as a group between myself, Raul, Vinai and [technical director] Edu."