The sensation of "pins and needles" in your arm is called paresthesia and is defined as the sensation of tingling, pricking or numbness on your skin. There are a variety of causes for this sensation, and normally there is is no long-term physical effect, but the effects of paresthesia can be transient or chronic.
Transient Symptoms
Paresthesia of the arm or hand is pretty common, and transient symptoms are related to other conditions. The common cause for the sensation is sustained pressure applied over a nerve, inhibiting or overstimulating its function. Removing the pressure will usually allow the sensation to gradually fade away. This could also be cause by keeping your arm bent for a long period of time, causing the blood circulation to be cut short. The symptoms can also be related to open-mouth hyperventilation and panic attacks.
Chronic Paresthesia
Chronic paresthesia is an indicator of a problem with the function of neurons and can also be the result of poor circulation in the limbs. Irritation of the nerves can come from inflammation in the tissues. Joint problems such as rheumatoid arthritis and carpal tunnel syndrome can be common sources of paresthesia. Paresthesia associated with poor circulation can be related to more serious problems, such as peripheral vascular disease. Plaque builds up on artery walls over decades, and the walls eventually rupture. Without proper supply of blood and nutrients, nerve cells no longer adequately send signals to the brain.
Treatment
Chronic paresthesia should be treated by a physician. Because of the vast range of causes a nerve conduction study can provide useful information for making a diagnosis and a CT scan may be needed to rule out causes from the central nervous system. Some medication can be helpful, such as immunosuppressent prednisone, intravenous gamma globulin and anticonvulsants. In some cases, gently rocking the head from side to side can ease the pins and needles sensation and speed up the recovery process.