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Arabi, 75, replaces Ahmed Abul Gheit, who had been in the job since 2004.
A respected judge who served at the International Court of Justice in 2001, Arabi said he had already met new Prime Minister Essam Sharaf and discussed "Arab and African affairs."
Arabi's name was among 25 proposed by a coalition of youth movements behind the uprising that overthrew Mubarak, which also included Sharaf.
As a young diplomat he was part of the Egyptian team who negotiated a peace deal with Israel which yielded the Camp David peace accords in 1978. Egypt and Jordan are the only Arab countries to have signed a peace deal with Israel.
In a recent article in the independent daily al-Shorouk, Arabi said he believed Egypt must maintain its peace deal with Israel, which was signed in 1979 and led to Egypt being shunned by the Arab League.
But he stressed that Egypt did not have to respect a controversial Israeli blockade on the Gaza Strip.
Egypt closed its border with the neighbouring Palestinian territory after the Islamist group Hamas routed forces loyal to president Mahmud Abbas's Fatah movement in 2007, taking control of the enclave.
It later opened the border for humanitarian cases.
After retirement, Arabi set up the Cairo Regional Centre for International Commercial Arbitration, a non-profit organisation which administers both domestic and international arbitrations.
The US-educated diplomat is "very well-respected in diplomatic circles," a source at the foreign ministry told AFP.
Nationwide protests that erupted on January 25 to demand economic and political change left at least 384 dead and more than 6,000 injured.
Sharaf, who was appointed on Thursday after demonstrations against the presence of Mubarak's associates in the caretaker government running affairs since the former president's departure, vowed to work for a democratic system.
The new premier addressed thousands of protesters in Cairo's Tahrir Square on Friday and was received with raucous cheers of support.
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A respected judge who served at the International Court of Justice in 2001, Arabi said he had already met new Prime Minister Essam Sharaf and discussed "Arab and African affairs."
Arabi's name was among 25 proposed by a coalition of youth movements behind the uprising that overthrew Mubarak, which also included Sharaf.
As a young diplomat he was part of the Egyptian team who negotiated a peace deal with Israel which yielded the Camp David peace accords in 1978. Egypt and Jordan are the only Arab countries to have signed a peace deal with Israel.
In a recent article in the independent daily al-Shorouk, Arabi said he believed Egypt must maintain its peace deal with Israel, which was signed in 1979 and led to Egypt being shunned by the Arab League.
But he stressed that Egypt did not have to respect a controversial Israeli blockade on the Gaza Strip.
Egypt closed its border with the neighbouring Palestinian territory after the Islamist group Hamas routed forces loyal to president Mahmud Abbas's Fatah movement in 2007, taking control of the enclave.
It later opened the border for humanitarian cases.
After retirement, Arabi set up the Cairo Regional Centre for International Commercial Arbitration, a non-profit organisation which administers both domestic and international arbitrations.
The US-educated diplomat is "very well-respected in diplomatic circles," a source at the foreign ministry told AFP.
Nationwide protests that erupted on January 25 to demand economic and political change left at least 384 dead and more than 6,000 injured.
Sharaf, who was appointed on Thursday after demonstrations against the presence of Mubarak's associates in the caretaker government running affairs since the former president's departure, vowed to work for a democratic system.
The new premier addressed thousands of protesters in Cairo's Tahrir Square on Friday and was received with raucous cheers of support.
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