The 33-year-old has put pen to paper on a new six-month deal at Santos with his previous contract set to expire at the end of June.
Santos president Marcelo Teixeira met the player's father and agent on Tuesday in order to finalise the terms of the extension.
Teixeira said: "This is a historic and significant day for Brazilian football, a gift for the fans of Santos FC. Our idol, our boy, the prince wearing our number 10 jersey remains.
“This is a very important moment in this rebuilding process and we needed Neymar, both on and off the field. The phrase 'I'm going, I'm coming back, I'm staying' is emblematic and fundamental for the repositioning of Santos FC to its rightful place."
Recent reports had suggested that Neymar could return to Europe but he will now remain in Brazil before being available for free next January.