Gremio unveiled the 29-year-old as their latest recruit on Monday afternoon after he passed a medical.
"I came to be a champion with the club," Santos told Gremio's official website.
Arsenal signed Santos from Fenerbahce for £6.8million in August 2011.
However, the Brazil international has fallen down the pecking order at Emirates Stadium behind England left-back Kieran Gibbs and, following the deadline day arrival of Spaniard Nacho Monreal, is now surplus to requirements.
A picture of Santos arriving in his homeland, where he last played for Corinthians in 2008/2009, greeted by cheering fans was posted on Twitter.
Meanwhile, Arsenal forward Lukas Podolski put a post on his official Twitter account which read: "@Andre_santos27 We will miss you man, I wish u all the very best #Gunner God bless you".
Santos made 26 appearances for Arsenal, scoring four goals.