Emmanuel Petit says Arsenal landed the bargain of the window when they signed Mesut Ozil from Real Madrid.
The German international moved the the Gunners on transfer deadline day for £42.5m, almost trebling Arsenal's previous transfer record of £15m.
Although representing a huge amount of money for the transfer of a single player, Petit believes that Ozil represents excellent value for money.
The former Arsenal and France player also praised the free signing of Mathieu Flamini, insisting his compatriot has added something extra to the team.
He told the Daily Mirror: “There was a lot of pessimism around Arsenal at the start when they were beaten by Aston Villa in their first match.
“But they have recovered well since then and Ozil has been magnificent. He cost a lot of money but was the best bargain in the window.
“And Flamini has given the team something they lacked.”
Arsenal have gone in to the international break top of the Premier League and look like genuine title contenders for the first time in a few seasons.
However, Petit - a Premier League and FA Cup double winner with Arsenal - has urged caution.
“They have to face some big tests in the months to come in the Premier League,” he said. "They still have to face Chelsea, Manchester City, Liverpool and Manchester United.
"They will be big tests. And there is now the international break.
“It can sometimes be difficult to keep the same momentum you had before the break.
Despite warning of tough times ahead for Arsenal's title challenge, Petit did admit that the signs of a rejuvenation at the Emirates are exciting.
“But I have to say that so far they have been tremendous and playing some excellent football – football that is great to watch and some of the best in Europe.
“And the arrival of Ozil is a positive sign for the fans. It looks now as though the club are bringing in the top players rather than selling them .
“With Aaron Ramsey looking back at his best after a bad injury, the signs are good.
“This could well be the season when they win a major trophy after a long wait.
“The young guns at the club will look up to the likes of Ozil and get confidence from being alongside him.
“Arsenal are now playing the way they used to. But we have yet to see how they cope with the major sides in the Premier League."