Big things were expected from the Swiss international following his £30million move from Borussia Monchengladbach to Emirates Stadium last summer.
But the 24-year-old has failed to show his best form for the north London club with Arsenal struggling to break into the top four and uncertainty surrounding the future of Arsene Wenger.
Cascarino has made his feelings known towards the Gunners midfielder and feels he has been a complete waste of money and is a major weak point in the Arsenal team.
Cascarino, speaking on talkSPORT, said: “Granit Xhaka has been one of the worst signings of the season – maybe the worst of all-time.
“Arsenal spent over £90m in the summer and none of the signings have proven themselves.
“Lucas Perez has hardly had a kick, he’s in and out of the team. He looks a good player but just doesn’t play often enough.”