The decision has been made after the first case of the virus in English football was confirmed through Nottingham Forest owner Evangelos Marinakis.
Marinakis, 52, also the owner of Olympiakos, revealed he'd contracted the coronavirus and it's been confirmed he met with several of the Gunners players when they faced up in the UEFA Europa League two weeks ago.
"The medical advice we have received puts the risk of them developing Covid-19 at extremely low," Arsenal revealed in an official statement.
"However, we are strictly following the government guidelines which recommend that anyone coming into close contact with someone with the virus should self-isolate at home for 14 days from the last time they had contact.
"As a result, the players are unavailable for tonight's match against Manchester City and the Premier League has decided the game should be postponed.
"The players will remain at their homes until the 14-day period expires. Four Arsenal staff who were sitting close to Mr Marinakis during the match will also remain at home until the 14 days are complete."
Olympiakos are set to host Wolves in the round of 16 Europa League fixture on Thursday after UEFA rejected the Premier League side's request to postpone the game.
According to BBC, 382 cases of Covid-19 have been reported in the United Kingdon, with six deaths.