CCTV footage obtained by the Sun shows Alexandre Lacazette, Matteo Guendouzi, Mesut Ozil and Pierre-Emerick Aubameyang all inhaling from balloons allegedly containing the substance.
The players were at a private party at a London club in August.
Nitrous oxide is also known as laughing gas or ‘hippy crack’.
An Arsenal spokesperson told the BBC players would be “spoken to and reminded of their responsibilities”.
Nitrous oxide slows down the brain and the body’s responses, giving users a feeling of euphoria and can cause hallucinations, but can also lead to headaches, dizziness and paranoia.
However, large doses can starve the body and brain of oxygen, according to government drug advice service Frank.
While it is not illegal to possess the drug, it is illegal to give away or sell.