The central defender has moved to Upton Park for an initial £6million fee which could rise to £7.5million based on appearances and has signed a four-and-a-half year deal with The Hammers.
Arsenal will claim 25% of the fee as they had a sell-on clause when Upson joined Blues in January 2003.
Upson, who made 127 starts for Blues during his four years at the club, is likely to make his Hammers debut in the Premier League game against Aston Villa this weekend.