He received his education in Nicaea at a monastery of which he later became the abbot, though not in orders. Subsequently he gave himself up to a life of solitary asceticism in a Bithynian monastery, and is said, probably wrongly, to have remained some time in a monastery on Mount Athos.
From this seclusion he was in 1255 called by Theodore II Lascaris to the position of patriarch at Nicaea, and four years later, on that emperor's death, became joint guardian of his son John. His fellow-guardian Georgios Mouzalon was immediately murdered by Michael Palaeologus, who assumed the position of tutor.
Arsenius then took refuge in the monastery of Paschasius, retaining his office of patriarch but refusing to discharge its duties. Nicephorus of Ephesus was appointed in his stead. Michael, having recovered Constantinople, induced Arsenius to undertake the office of patriarch, but soon incurred his severe censure by ordering the young prince John to be blinded. Arsenius went so far as to excommunicate the emperor, who, having vainly sought for pardon, took refuge in false accusations against Arsenius and caused him to be banished to Proconnesus, where some years afterwards (according to Fabricius in 1264; others say in 1273) he died.
Throughout these years he declined to remove the sentence of excommunication which he had passed on Michael, and after his death, when the new patriarch Josephus gave absolution to the emperor, the quarrel was carried between the "Arsenites" and the "Josephists." The "Arsenian schism" lasted till 1315, when reconciliation was effected by the patriarch Nephon I. Arsenius is said to have prepared from the decisions of the councils and the works of the Fathers a summary of divine laws under the title Synopsis Canonum. Some hold that Synopsis was the work of another Arsenius, a monk of Athos; the ascription depends on whether the patriarch Arsenius did or did not sojourn at Mount Athos.