The former Bayern Munich player acknowledges he is now in the latter stages of his career and believes his current club could well be his last.
"I want to express my joy at signing possibly my last professional contract," he said at a press conference.
"Before we reached an agreement I had to analyse where I wanted to end my career, and Gremio are the team that I hope to end my career with at the end of the contract."
The ex-Brazil midfielder was sat beside president Fabio Koff and discussed what factors contributed towards his decision.
"Never in my career have I lived what I am living here at Gremio," he explained.
"There has been such a great team spirit since I arrived six months ago. It feels like I have been here for years and the atmosphere inside the club has helped me a lot, so I decided to continue.
"Above all, it was the project that swayed my decision. Next year will be very important for us, we are going in search of titles. The fans are expecting and I believe we have everything in order to be successful."
The 38-year-old joined Gremio in May after a season with Qatari outfit Al-Gharafa.