The 30-year-old did not live up to expectations at Emirates Stadium after arriving from Fenerbahce in 2011 and secured a temporary return to Brazil in February.
Santos enjoyed his time at Gremio but the club could not afford any permanent deal and so he has admitted his disappointment at having to go back to Arsenal.
He told Radio Gre-Nal: "My loan deal is over. It was six months long and now I am returning. Gremio had an agreement with Arsenal and I have to return."
Santos added: "I wanted to stay. Gremio were fair regarding everything. I felt well there and I wanted to win a title before leaving.
"Unfortunately there is no deal and I had to return to Arsenal."