"The commander is back," Gremio said on their Facebook page.
"Felipao (Big Phil) is the new coach," added the Porto Alegre club where Scolari first made his name during the mid-1990s with a successful, but often physical, team.
Scolari, who led his country to their fifth world title in 2002, officially parted company with the 2014 World Cup hosts on July 14, one day after the end of the competition where they finished fourth.
He returned for a second stint as Brazil coach in November 2012, saying his team had "a duty" to win a sixth crown on home soil.
But, despite reaching the semi-finals, they did not look capable of coping with the pressure and capitulated to an astonishing 7-1 defeat in Belo Horizonte on July 8 after conceding five goals in 18 first-half minutes.
It was their worst World Cup defeat and equalled their record 6-0 loss to Uruguay in 1920.
Brazil went on to lose 3-0 to Netherlands in the third-place playoff, another result that would have been unthinkable for the hosts a few days previously.
Scolari, who also led Portugal to the Euro 2004 final and a World Cup semi-final in 2006, had a brief spell at Gremio in 1987 and returned in 1993 for a much more successful four-year spell.
He turned Gremio into one of the most feared and ruthless teams in South America, winning the Libertadores Cup in 1995 and the Brazilian championship the following year.
Scolari will replace Enderson Moreira who was fired on Sunday after his side lost at home to Coritiba in the Brazilian championship.
Gremio are 10th in the 20-team table with 19 points from 12 games.
- Sports & Recreation