The attack was the deadliest on the Sunni town since war erupted in neighbouring Syria nearly three years ago.
The deaths came as at least 20 rockets and shells launched from Syria hit border areas in the eastern Bekaa Valley yesterday, which has seen frequent Syria-related violence.
President Michel Sleiman called on the army to "protect" border villages, while ex-premier Saad Hariri described the attack as a "massacre."
After news of the deaths broke, violence erupted in the northern city of Tripoli, a frequent scene of Syria-related clashes and killings.
Local official Ahmad al-Hojairi said five of the dead were children, three from one family, and that people were in a state of panic.
"We are being made to pay for the crisis in Syria. What happened today is terrifying," he said.
Arsal is a Sunni area in the Bekaa Valley that hosts thousands of refugees who have fled the violence in Syria.
The Syrian air force has been bombed it several times, most recently in December in a raid that prompted the Lebanese army to hit back with anti-aircraft fire.
Once dominated by Damascus militarily and politically, Lebanon is divided over the Syrian war.
The divisions have widened ever since Lebanon's Shiite movement Hezbollah acknowledged in May that it was sending fighters into Syria to support Assad.
President Sleiman renewed his implicit warning to Hezbollah over the affect this was having on Lebanon.
"The consequences of even deeper involvement in the Syrian crisis is making the Lebanese pay a high price," said Sleiman, who has previously called on Hezbollah to withdraw from Syria.
He also called on "security and military officials to take all relevant measures to protect Lebanese towns and villages on the border with Syria."
Saad Hariri, Sunni leader of the Future bloc that opposes Assad and Hezbollah, described the attack as a "massacre."
"The murderous and terrorist rockets, regardless of their source, have a clear purpose to sow discord, and intimidate and terrorise innocent citizens," he said.
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