Arsenal have confirmed that Denilson has rejoined Sao Paulo on another season-long loan deal.
The Brazilian returned to his former club last season and has agreed to go back for the 2012-13 campaign.
Arsenal had been hoping to sell the out-of-favour midfielder on his return to the Emirates this summer.
But they were unable to find a buyer and although Sao Paulo were unable to afford the asking price, they were keen to have the 24-year-old back on loan.
Denilson was a regular during his previous loan spell, making 47 appearances and helping the team finish sixth in last year's Campeonato Brasileiro.
After making a £3.4m move from Sao Paulo to Arsenal in 2006, Denilson played 153 games for the Gunners, scoring 11 goals.
But with first-team opportunities limited ahead of the 2011-12 season, he returned to his hometown club last summer.