Born in Pindamonhangaba, São Paulo, Luiz Gustavo started his professional career at Corinthians Alagoano. In August 2007, he was loaned to German club 1899 Hoffenheim, then of the 2. Bundesliga. On 1 April 2008, Hoffenheim signed Gustavo on a permanent contract. He went on to play two-and-a-half Bundesliga seasons for the club.
On 3 January 2011, Luiz Gustavo was signed by FC Bayern Munich. The amount of the transfer fee varies from €15–20 million, depending on different sources. Twelve days later, he made his debut for the Bavarian club, coming on as a second-half substitute in the 1–1 away draw with VfL Wolfsburg. He scored his first goal for the club on 26 February, the equaliser in the 1–3 home loss against Borussia Dortmund, by volleying in Franck Ribéry's cross.
In his first full season at Bayern, he played 46 matches across all competitions, with Bayern finishing runner-up in all three tournaments which they contested. His only goal came on 13 August, an added-time strike which won a league match away to VfL Wolfsburg. On 12 May 2012, Luiz Gustavo was selected to start in the centre of midfield in the DFB-Pokal Final, but he was substituted at half-time for Thomas Müller as Bayern were beaten 5–2 by Dortmund. He missed their defeat a week later in the Champions League Final, as he was booked in the second leg of their semi-final victory over Real Madrid.
Luiz Gustavo began the 2012–13 season by featuring in Bayern's 2–1 win over Dortmund in the DFL-Supercup on 12 August. He scored four times in 22 matches as they won the league title. On 25 May 2013, Luiz Gustavo appeared as an added-time substitute for Ribéry as Bayern defeated Dortmund 2–1 in the Champions League Final at Wembley Stadium.
On 16 August 2013, it was reported that Luiz Gustavo had signed for Wolfsburg for an unspecified amount, on a contract that would tie him to the club till 2018. He made his debut the following day, starting in a 4–0 win over FC Schalke 04 at the Volkswagen Arena. A week later, in his next appearance, he was sent off for two bookings as his team lost 0–2 at 1. FSV Mainz 05, and he was also dismissed on his return on 14 September in a 1–3 defeat at Bayer Leverkusen. He scored four goals in 29 matches as Wolfsburg came fifth to qualify automatically for the group stage of the next season's UEFA Europa League, receiving a third red card on 19 April 2014 in a 3–1 win at rivals Hamburger SV.
He scored four times in five matches as Wolfsburg won the DFB-Pokal in his second season, starting with a brace in a 4–1 win over 1. FC Heidenheim in the second round on 29 October 2014, and continuing with a goal in their 4–0 victory at DSC Arminia Bielefeld in the semi-final on 29 April 2015. On 30 May, he scored from a rebounded shot by compatriot Naldo to equalise in the final against Borussia Dortmund, with Wolfsburg eventually winning 3–1 for their first cup honour.
He was a member of Luiz Felipe Scolari's squad for the 2013 FIFA Confederations Cup and played the full 90 minutes as Brazil defeated world champions Spain 3–0 in the final at the Estádio do Maracanã. He scored his first goal for Brazil in a friendly match against Australia on 7 September later that year.
During the 2014 FIFA World Cup on home soil having played every minute up to that point, he was suspended for the quarter-final match against Colombia due to accumulation of yellow cards. He returned to the starting eleven for the next two games as the team finished fourth.
Luiz Gustavo is a devout Catholic, commenting that he "read[s] the Bible a lot and pray[s] twice a day." He became engaged to his girlfriend Milene on 25 December 2010, while on holiday in Brazil. He cites his mother as a big source of inspiration for him because of her dream that he would one day succeed as a player, before her death when he was just 16 years old.
- As of 7 May 2016
|1899 Hoffenheim||2. Bundesliga||2007–08||27||0||3||0||—||30||0|
- Scores and results list Brazil's goal tally first.
|1.||7 September 2013||Estádio Nacional Mané Garrincha, Brasília, Brazil||Australia||Friendly|
|2.||26 March 2015||Stade de France, Saint-Denis, France||France|
- Bayern Munich