William Saliba signed a five-year deal with Arsenal and his long-term future remains at the club.
The French youth international has yet to play for Arsenal’s first team and there is a desire for the teenager to get more game time.
In 2019 the 19-year-old joined the Gunners from Saint-Etienne for £27m before being loaned back to the French top-flight club.
Nice, who are 12th in France’s Ligue 1, will pay all of Saliba’s wages while he is on loan and the deal does not include a fee, according to The Athletic.
The club are “confident” Saliba will have a “great career” with the Gunners, said Arsenal technical director Edu.
“William experienced a very challenging time last year, with his playing time limited by injury and the early ending of the Ligue 1 season due to the pandemic,” he said.
“We will be keeping in close contact with William during his time with Nice and look forward to seeing him make good progress until the end of the season.”