Saliba, 19, signed for Arsenal from St Etienne in the 2019 summer transfer window for £27million, and was immediately loaned back to the Ligue 1 club for the 2019/20 season.
The France U20 international was handed the number 4 shirt at Arsenal upon his return, but has yet to make his first-team debut for the Gunners.
Standard Sport understands that Nice will pay all of his wages, which are believed to be in the region of £40,000-a-week, but no loan fee.
The loan deal also includes no option for Nice to make the move permanent in the summer, with Arsenal believing Saliba has a bright future at the club.
The teenager has endured a difficult start to life in England, but it is felt more experience and game time will help him reach his potential.
“Saliba arrived here after a very challenging year,” Arsenal’s technical director, Edu, said last month.
“He was injured, he didn’t play a lot of games as people really know, he has had some personal issues with his family.
“He needs a little bit of time and, when you start to see his position on the field, there are probably three or four players we see in front of him and will play more games.
“Let’s see – but of course he has a good future.”