The midfielder did not hold back in his assessment of the Gunners' performance after a toothless 2-0 defeat at St James' Park which all-but handed fourth place to arch-rivals Tottenham.
It followed a 3-0 defeat to Spurs in the north London derby as Arsenal's four-point advantage over their neighbours vanished in five days.
With Tottenham needing a draw against Norwich on the final day to secure the final Champions League qualification spot, Xhaka was not in the mood to sugar-coat the situation.
"We didn't do what the game plan was, not listening to the coach, doing our things and when you do your things these games happen," the Swiss told Sky Sports.
"What happened was a disaster performance and [playing] like this you don't deserve the Champions League, you don't even to deserve to play in the Europa League.
"It's very hard to take at the moment and I don't know why we're not doing what the coach is asking for us."
He added: "If someone isn't ready for this game, stay at home. Simple as that.
"Age doesn't matter. You can be 30, 35, you can be ten, you can be 18. If you're not ready for that, you're nervous, stay on the bench or stay at home - don't come here.
"We need people to have the balls - sorry to say that - to come here and to play because we knew this was maybe one of the most important games for us but to perform like this is not acceptable.
"Very, very sad for us, I'm very, very disappointed and I feel very sorry for the people who came here to support us. I feel very, very sorry for Arsenal supporters. This is not the way we wanted to go and I can only say sorry to them."
Xhaka's comments were labelled 'a disgrace' by Manchester United legend Gary Neville - and ex-Tottenham striker Darren Bent wasn't impressed either.
Bent, who supports the Gunners, told talkSPORT: "Maybe it's because it's Xhaka and maybe that's a bit unfair, because at times, he's let Arsenal down.
"Even this season, red cards silly mistakes. If he's talking solely about last night, I can understand it.
"But from the dressing room perspective, I can imagine players who have performed more consistently than he has, looking at him thinking, 'The cheek for you to come out and say that after some of the performances you've put in!'
"When you hear him speak, he looks like a really good guy. But there will be players in the dressing room thinking, 'Hold on a second - you're digging us out? Look at yourself over the last few seasons, you've let us down and you're supposed to be one of the senior players!'"
However, Arsenal fan and talkSPORT host Laura Woods sprung the the 29-year-old's defence.
She said: "He's had the guts to come out, do that interview and speak from the heart.
"I think sometimes we jump down these players' necks for the exact language they use and we analyse it to the nth degree.
"It's not his first language, although he's fluent, but if I had to go to a foreign country and speak after a game like that…
"I would rather not take the negatives. I actually thought it was commendable."