The former Germany U17 international is highly rated by the Arsenal coaching staff and has impressed during his time with the Scottish outfit.
Rangers manager Mark Warburton has confirmed that the young Arsenal midfielder will remain at the Ibrox stadium for the remainder of this season.
“Gedion is with us,” he confirmed. “We talked to them as part of an on-going process. It’s about us creating an environment here where clubs of that stature trust us with their players”.
He added: “That’s important medically, nutritionally, training wise, (in terms of) game-time, experience and that their players will go back to their clubs better individuals on and off the pitch”.
Zelalem was set to return to Arsenal next month but both clubs have decided that it is best for the youngster to stay at Rangers and continue his development with regular first-team football.
The young central midfielder has made 14 first team appearances already this season. Zelalem can operate in a number of central midfielder roles including that of an attacking midfielder as well as a box-to-box midfielder.
The 18-year-old is technically gifted and is regarded as one of the finest young talents around.
After agreeing on a move for Basel midfielder Mohamed Elneny, this is the second deal Arsenal have sealed in the space of three days.