The Foxes made the breakthrough in the sixth minute of the contest when Youri Tielemans was allowed to drive into the Arsenal box before picking out the far corner of the net.
Arsenal were the team searching for the game's fifth goal in the latter stages, but it finished 3-1 to the Gunners, who will still believe that they can make a late push for the Champions League positions.
The victory has seen Arteta's team move into ninth position in the Premier League table, eight points behind fourth-placed West Ham United, while Leicester remain third, four points clear of the Hammers.
6th min: Leicester make the breakthrough in the sixth minute of the contest as Tielemans drives into the Arsenal box before picking out the far corner with a low strike. Arsenal's defence back off, allowing the midfielder the opportunity to break the deadlock.
8th min: The home side almost double their lead as Arsenal goalkeeper Bernd Leno takes too long to clear, allowing Jamie Vardy to make the block, but the German manages to collect at the second time of asking.
13th min: Arsenal are awarded a penalty at the King Power Stadium as Tielemans brings Pepe to the ground with a loose challenge.
14th min: Following a VAR review, the penalty is chalked off and a free kick is awarded as the first contact on Pepe came from Wilfred Ndidi, with the challenge taking place outside the penalty box.
15th min: The resulting free kick is delivered by Pepe, but Jonny Evans is across to make the clearance, with Leicester surviving what could have been a dangerous moment.
21st min: Wonderful play and strike from Harvey Barnes as the Leicester attacker unleashes one from long range, but Leno is on hand to make the save.
27th min: Another opening for the visitors as Willian drives into a dangerous position before unleashing, but the Brazilian's effort is just wide of the far post as Leicester remain ahead.
39th min: The Gunners level the scores in the latter stages of the first period as Willian's clever free kick picks out the head of Luiz, who angles a brilliant effort into the bottom corner of the net.
45th min: The referee is sent across to the monitor to check for a possible handball inside the Leicester penalty box as Ndidi blocks an attempt from Pepe, and the spot kick is awarded by Paul Tierney.
47th min: Lacazette drills the ball into the back of the Leicester net to hand Arsenal a 2-1 lead in the final exchanges of the first half at the King Power Stadium.
52nd min: Arsenal stretch their lead to 3-1 over the Foxes as a fast break leads to Martin Odegaard poking the ball into Willian, who delivers low into Pepe, and the Ivory Coast international simply cannot pass up the chance to poke into the back of the net from close range.
63rd min: Half-chance for Leicester to score a second as Kelechi Iheanacho works some space inside the Arsenal box under pressure, but Mohamed Elneny is back to make the block, and the ball bounces off Iheanacho before dropping behind for a goal kick.
72nd min: Marc Albrighton has a powerful strike blocked by his own teammate Vardy after finding some space inside the Arsenal box before unleashing towards goal.
81st min: Thomas Partey lines one up outside the penalty box before firing towards goal, but the midfielder's effort is blocked behind for a corner, which Leicester clear.
82nd min: Tierney has a go from distance this time as the ball breaks to the defender outside the Leicester box, but the Scot's attempt was always moving wide of the post.
87th min: Just wide from Pierre-Emerick Aubameyang as the Arsenal forward works the ball onto his right foot before just curling the ball wide of the far post.
96th min: Huge chance for Leicester to score a second in the final exchanges of the contest, but Iheanacho fires his effort over the crossbar from close range.
MAN OF THE MATCH - WILLIAN
It would be fair to say that Willian has found it difficult to make his mark for Arsenal since arriving from Chelsea last summer, but the Brazilian was key to his side picking up all three points on Sunday afternoon.
The 32-year-old's excellent delivery allowed Luiz to score Arsenal's first, while he also played a key role in his team's third of the afternoon, putting the ball on a plate for Pepe to tap home.
Willian's overall performance was just much, much better.
Luiz's header to level the scores at the King Power Stadium was absolutely terrific; the Brazilian's defensive work continues to be called into question, but it was an expert header from the experienced centre-back, who managed to work the space before steering the ball away from Schmeichel into the Leicester goal.
Possession: Leicester 44%-56% Arsenal
Shots: Leicester 7-11 Arsenal
Shots on target: Leicester 3-4 Arsenal
Corners: Leicester 2-7 Arsenal
Fouls: Leicester 15-3 Arsenal
LEICESTER (4-4-2): Schmeichel; Castagne, Evans (Amartey 69'), Soyuncu, Thomas (Albrighton 46'); Ricardo, Ndidi, Tielemans, Barnes (Under 51'); Vardy, Iheanacho
ARSENAL (4-2-3-1): Leno; Cedric, Luiz, Mari, Tierney; Elneny (Thomas 66'), Xhaka; Pepe, Smith Rowe (Odegaard 42'), Willian; Lacazette (Aubameyang 84')