The 19-year-old defender is highly rated by scouts in England, but was not given first team game time at the Emirates Stadium.
Rather than buying his time, Walters has signed for Championship club Luton Town.
“It was the style of play here, it really suits me how you guys want to play here. Rob himself is one of the key reasons why I actually think Luton was a great decision for me," he said, per Luton Today.
"I think I can really learn a lot from him, I think I’ll be able to flourish under him and really enjoy myself as well.
“I'm really excited for the challenge ahead. I really resonate with all the club’s beliefs, I really like the style of play, I get along with Rob really well and there are a few friendly faces from the past here as well."