Gundogan has been transformed for Man City this season, and has already found the net 13 times in the current campaign.
That is double the German’s best ever tally for a season, and he still has plenty of time to add to it.
The 30-year-old, who is hoping to be back fit for Sunday’s match with Arsenal, has stepped up in the absence of Kevin De Bruyne – who is also primed to start at Emirates Stadium this weekend.
And Arteta, who worked with Gundogan when he was an assistant at City, is not surprised to see the midfielder shining.
“I think now he is playing a higher role in the team,” said Arteta.
“He has always had the ability to arrive in the box and has great timing and the qualities to complete the actions.
“When he had the deeper role he didn’t have the licence to do that but he is a tremendous player and he is doing really, really well this season.”
City head to Arsenal on Sunday having won their last 17 games in a row in all competitions.
They have been in imperious form and they have largely done that without star duo Sergio Aguero or De Bruyne, who have been injured.
“Well that [coping without Aguero or De Bruyne] hasn’t happened overnight, it has been built over the past five years,” said Arteta.
“Recruit really well, recruit players that can take the next challenge when someone starts to get in the final stage of their career and that squad evolution has been done in a really nice way.
“Credit to everyone who makes the decisions there because they have all the time kept the vision of what was the immediate need but what was needed two or three years in the future.”