The Nigeria international struck the fourth goal in a comprehensive 4-1 win for the Gunners after Lucas Perez had put the visitors in charge in Switzerland by hitting a hat-trick.
Seydou Doumbia struck a late consolation for Basle, but the victory for Arsenal, coupled with PSG only scraping a draw at home to Ludogorets, means Arsenal advance to the round of 16 as group winners for the first time since 2012.
With Arsene Wenger's side already two goals to the good at the interval, the news that their Group A rivals were behind at home was an added incentive to close out victory, according to Iwobi.
"We saw the scores at half-time when we were walking into the dressing room," he told the club's official website.
"It gave us that extra belief so we just had to maintain our positive approach
We dropped off a bit which is why we conceded, but we still completed the job."
When the final whistle blew at St.Jakob-Park, Arsenal knew they had done all they could and, even though a stoppage-time Angel Di Maria goal saw PSG draw level some 250 miles away in Paris, the resulting draw saw the Gunners leapfrog the Ligue 1 champions.
It means they top their Champions League group for the first time since 2012 and will be looking to end a six-year wait to advance beyond the round-of-16 stage of the competition.
Wenger opted to take a strong squad to Basle and decided to start with both Alexis Sanchez and Mesut Ozil, when many anticipated they would be rested.
Instead, the pair played a part in all of the Arsenal goals before being substituted in the second half ahead of a packed festive schedule.
Wenger said after the game that being first or second made almost no difference given the strength of the other clubs in the competition, although Iwobi echoed the views of his manager in insisting it was important to take whatever advantage they could from heading the group going into Monday's draw in Nyon.
"Having a second leg at home is a big advantage," he said.
"It gives you the belief that you can do it
However, the Champions League is full of top teams
It (a goal for me) felt like a long time coming and it's always a great feeling to score a goal, but I'm just pleased with the team's performance and that we were able to finish top of the group."
Laurent Koscielny said the club could go into the draw with no regrets, having won four of their six group-stage matches.
"We needed to finish the group stage well to have no regrets and and we started the game well by scoring two early goals," he said.
"After that we kept attacking and we were dangerous on the counter-attack, so it was a good win for us to have after our big win on Saturday (5-1 at West Ham).
"We had a small chance of finishing first
After PSG we knew we had one more game to finish first and we did the job
It's important to finish first because we have the second game at home."
Source : PA
Source: PA