The 26-year-old forward joined the Rossoblu on a season-long loan from Rentistas last summer and netted four times in 35 league outings for the Sardinians
It had been reported that the attacker, who joined the Rossoblu on loan from the Uruguayan club last summer, did not want to remain in Sardinia.
However, these rumours were dismissed in a statement on the Italian club's official website announcing Ribeiro's arrival.
"In reference to the many rumours that have been circulating in recent days regarding Thiago Ribeiro, Cagliari, as usual, has based its actions on facts and not mere words," the statement read.
"The player has had his contract extended for the agreed fee, on 1 July. Therefore, all of the allegations and statements made regarding the player's contractual situation were without foundation."
The 26-year-old, who previously enjoyed a loan spell in Europe with Ligue 1 side Bordeaux, scored four goals in 35 appearances in Serie A last season.