Schalke confirmed in a statement that the 23-year-old had signed a deal at The Emirates which runs until 2022.
Kolasinac will be competing with two senior left backs, Nacho Monreal and Kieran Gibbs, for a first-team spot.
He represented Germany at youth level before deciding in 2013 to play for Bosnia, his parents' homeland, and has collected 17 caps.
(Reporting by Hardik Vyas in Bengaluru; Editing by Ken Ferris)
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