Youssef El Arabi’s goal in the dying minutes of extra time ensured it was the Greek outfit who advanced to the last 16 on away goals following a 2-2 aggregate draw.
The Gunners struggled to get going and fell to a 2-1 defeat on the night, though Pierre-Emerick Aubameyang thought he had done enough to send Arsenal through when he equalised with an overhead kick in the second period of extra time, after Pape Abou Cisse’s header took the tie into an additional 30 minutes.
Aubameyang then squandered a glorious opportunity to spare Arsenal’s blushes after El Arabi’s decisive goal.
‘It hurts, big time,’ Arteta said. ‘We had a lot of hope in this competition. It was a great way for us to be able to go to Europe and it is a very beautiful competition to try to win.
‘I think we did a lot of positive things in the game. I think we created enough chances to win the game, but if you concede two set-pieces again in a tie like this, then you put yourself in big trouble.’
Gunners goalkeeper Bernd Leno conceded a cheap corner from which the visitors passed the ball around before El Arabi turned Giorgos Masouras’ cross beyond the German.
On whether Leno could have done more, Arteta said:
‘Yes, obviously he could have kicked it out, but then there is another situation to defend.
‘It’s not only the first phase but it’s the second phase of that corner that we concede and the player steps in and just taps in the ball in the six-yard box, which is unacceptable.
‘It is something we have to improve on.’
Olympiacos boss Pedro Martins believed his side got everything they deserved.
‘I think against Arsenal we had two very difficult games against a bigger opponent,’ he said.
‘But from the start of our European journey in the Champions League up until now we deserved to go through – perhaps we deserved more from our game against Spurs (in the Champions League group stage) and maybe we got what we deserved today.’