Smith Rowe has been out of action since the start of September after injuring his groin, but is back in training now.
The 22-year-old could make his comeback on Monday night when Arsenal travel to Oxford in the third round of the FA Cup.
Arteta is delighted to have Smith Rowe back and he believes he can play a key role in the second half of the season, with the Gunners currently leading Manchester City at the top of the Premier League by five points.
“He (Smith Rowe) knows that he has the space in the squad to fulfil his potential,” said Arteta. “We really like him, I really like him, and he is a very important player for us.
“He knows that now he needs to jump on the train fast enough to have the impact that we all hope that he can have this season.
“He can play as a left attacking midfielder, on the right, he can play off the left as well. Those qualities within those units on the outside is something that he compliments really well with. We will exploit that.”
Smith Rowe has been out for four months and in that time Arsenal’s attack has thrived, with Bukayo Saka and Gabriel Martinelli impressing alongside Gabriel Jesus, himself now sidelined.
Arteta admits it will have been tough for Smith Rowe to be on the sidelines for that period, but he has kept the youngster close to the squad to keep his spirits high.
“I think you have periods when it is a long injury like the one he had and there is a surgery in between,” he said. “We have tried to be really close to him, to give him advice. He has been in different places as well.
“He has been really good. We have talked about his moods, his energy and how much he has to be living with the team in this period and he has been really good.”
Smith Rowe had surgery to solve his groin issue, which had been causing him discomfort for a while, and Arteta says Arsenal have been carefully building up his workload.
“I think we have been pretty cautious in the past month or so, in terms of how we have progressed him in training.” he said. “And again you have to throw him out there and he needs to be able to observe the minutes, and that is why we have probably extended his preparation a little bit.”