The 65-year-old makes a swift return to management after his time in charge of Brazil came to an end following their devastating World Cup exit earlier this summer
The 65-year-old resigned as Brazil boss on July 14 following their third-place play-off defeat to Netherlands at the World Cup, which came on the back of a 7-1 thumping at the hands of Germany in the semi-finals.
However, Gremio and president Fabio Koff - the man who first appointed Scolari back in 1993 - have convinced him to make a swift return to management and announced the news via their official Twitter account on Tuesday.
They wrote: "Luiz Felipe Scolari returns as Gremio coach. He returns to the Tricolor after 18 years. Welcome, Scolari!
"New Gremio coach Luiz Felipe Scolari arrives in Porto Alegre on Wednesday and will be officially unveiled at [11.00 local time] at the Arena."
Scolari will work with Andre Jardina as his assistant, while Darlan Schneider will be his assistant and Fabio Mahseredjian the club's fitness coach.
He will hope his second spell at the club is as successful as the first, when they won one Brazilian championship (1996), three state titles (1987, 1995, 1996), as well as the Copa Libertadores (1995) and Recopa Sudamericana (1996).