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The Iceland international midfielder has agreed a two-year deal, which starts when his current contract expires at Scottish Premier League club Aberdeen.
Millers manager Steve Evans recently travelled to France to watch Arnason in action for Iceland, and he is excited by the capture of the 29-year-old having beaten off a host of competition for his signature.
Evans told the club's official website: "Kari is without doubt an outstanding talent and I am delighted we have brought him to Rotherham.
"He is a player who I first spotted at Plymouth and I followed his performances last season at Aberdeen with real interest. I have signed the lad to play in midfield but he has also represented his country at centre-back and full-back, his versatility is a major asset."
Arnason is the latest addition to the summer rebuilding programme at Rotherham, joining Michael O'Connor, Kayode Odejayi, Daniel Nardiello, Ian Sharps, Nicky Hunt and Scott Shearer.
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