He was announced as the champion of this year's series after beating Jahmene Douglas in tonight's (December 9) final at Manchester Central.
Both of Nicole Scherzinger's acts made it to tonight's head-to-head final after Christopher Maloney was eliminated last night (December 8).
Arthur admitted he didn't know what to say after hearing the result, but thanked fans for supporting him.
He will release a cover of Shontelle's 'Impossible' as his winner's single, with 100% of the proceeds going to the children's charity Together For Short Lives.
Arthur becomes the first ever winner of The X Factor to have fallen into the bottom two. He was in danger of leaving the competition along with favourite Ella Henderson in week seven, but was saved by the public vote when the judges could not reach a decision.
The winner thanked Scherzinger for her support and described her as the "best mentor".
He said: "You've been the best mentor, and not only that, you've been an amazing friend."
Scherzinger praised both Arthur and Douglas and described Arthur as a "fighter".
"He wanted this, he willed this to happen, I'm just so proud of him." she said on The Xtra Factor.
Both finalists took to the stage to perform two songs this evening - their favourite song of the series, and what could become their winning singles.
Douglas, 21, chose 'Angels' as his favourite performance of the series, while Arthur performed 'Let's Get it On' for a second time.
Douglas then took to the stage to perform a cover of The Beatles' famous hit 'Let It Be', and Arthur sang 'Impossible'.
When asked how he felt after Arthur's victory, Douglas said it was a "blessing to share the stage with such a talent".
He also joked that his debut album would be called 'Jahmazing' after Scherzinger repeatedly used the term to describe his performances.
Watch James Arthur perform his winner's single below:
Photo gallery - The X Factor final 2012: