The 30-year-old, who joined Milan from Barcelona in 2008, had also been linked to Brazilian teams Gremio and Palmeiras but has signed a deal until 2014.
Blackburn boss Steve Kean conceded on Saturday the club's hopes of signing Ronaldinho were "dead in the water".
Rovers, who have new owners, had offered him a £20m three-year contract.
Flamengo president Patricia Amorim told the club's official website: "We are pleased to announce the hiring of Ronaldinho for the next four years.
"I thank the board for the discretion and wisdom throughout the negotiations. This project started from the first day I got the presidency.
"I thank the legal department to head coach Wanderley Luxemburgo and especially the fans of Flamengo."
Milan coach Massimiliano Allegri was never in any doubt that Ronaldinho would return to his homeland rather than opt for a Premier League switch, and he leaves the Italian club with six months left on his contract.
The two-time world footballer of the year began his career with Gremio at the age of 18 before moving to Paris St Germain in 2001.
After two years in France, he joined Barcelona as they aimed to match the glamour of the Galacticos at fierce rivals Real Madrid.
His arrival inspired Barcelona's renaissance as they won La Liga in 2005 and a league and Champions League double in 2006, with the Brazilian producing some of the best form of his life.
In the summer of 2008 he turned down a move to Manchester City in favour of move to the San Siro but he failed to reproduce his Barca form for Milan.
He lost his place in the Milan starting XI when Zlatan Ibrahimovic and Robinho arrived last summer and, with Antonio Cassano having signed from Sampdoria this week, there is no space for him in Allegri's line-up.
Story from BBC SPORT:
"I thank the legal department to head coach Wanderley Luxemburgo and especially the fans of Flamengo."
Milan coach Massimiliano Allegri was never in any doubt that Ronaldinho would return to his homeland rather than opt for a Premier League switch, and he leaves the Italian club with six months left on his contract.
The two-time world footballer of the year began his career with Gremio at the age of 18 before moving to Paris St Germain in 2001.
After two years in France, he joined Barcelona as they aimed to match the glamour of the Galacticos at fierce rivals Real Madrid.
His arrival inspired Barcelona's renaissance as they won La Liga in 2005 and a league and Champions League double in 2006, with the Brazilian producing some of the best form of his life.
In the summer of 2008 he turned down a move to Manchester City in favour of move to the San Siro but he failed to reproduce his Barca form for Milan.
He lost his place in the Milan starting XI when Zlatan Ibrahimovic and Robinho arrived last summer and, with Antonio Cassano having signed from Sampdoria this week, there is no space for him in Allegri's line-up.
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