Grêmio Esportivo Brasil was founded after a dispute between players and directors of Sport Club Cruzeiro do Sul, which was supported and managed by employees of Cervejaria Haertel. On September 7, 1911, the Brazilian Independence anniversary, the club was founded at Santa Cruz street, in the residence of José Moreira de Brito, father of one of the former members of Cruzeiro do Sul, after a meeting between him and the other former members. The colors chosen were yellow and green, which are the colors of Brazil. Later, the club changed its colors to red and black, after Clube Diamantinos, a defunct club. The colors were also changed because EC Pelotas, rival of Brasil has similar colors.
The greatest moment in the club's history came during the 1985 Brazilian League, when Brasil managed to reach the semifinals after moving past giants such as Flamengo. However, the club from Pelotas did not manage to defeat Bangu from Rio de Janeiro and ended up missing the glory of taking part in the final match.
The following years were not nearly as successful. Even though the club was frequently invited to take part in the Brazilian League due to their fanatic crowd, performances were usually disappointing. In the league of Rio Grande do Sul, the club spent a few years in the second division. In 2004, Brasil won the second division of the regional league, the first title in many years.
On January 16, 2009 the team bus plunged 130 ft into a ravine in Rio Grande do Sul when returning from a friendly match against Santa Cruz. Striker Claudio Milar, defender Regis and goalkeeping coach Giovani were killed in the accident caused by the driver losing control when making a turn, more than 20 others were injured.