The move takes the Ecuador international out of the Bundesliga club's first-team plans for the season, with Stuttgart instead having only earmarked him for the second team after a January arrival that generated plenty of excitement at the time.
Arévalo, whose contract at the MHP Arena runs until 2031, joined from Spanish side Racing Santander for around €7.5m at the start of the year.
The 21-year-old will now look to gain regular experience in Portugal's top division, with no option to buy included in the loan agreement, according to multiple reports. Sport board member Fabian Wohlgemuth explained the thinking behind the move.
"For Jeremy, the loan to Estrela Amadora is the right career step at this point in time, to gain match practice and further experience in the top Portuguese league," Wohlgemuth said.
"We wish him all the best for his time in Portugal and will follow his development closely."
Arévalo made an immediate impression on his arrival from Spain, having scored eight goals in 18 Segunda División appearances for Racing Santander before his move, form that convinced Stuttgart to trigger a release clause in his contract.
He struggled for regular game time following his switch to Germany, however, and the club has now decided a loan abroad offers the best route to the consistent football he needs at this stage of his development.
Born in Maliaño, Spain, to Ecuadorian parents, Arévalo represented Spain at youth level before switching his allegiance and going on to earn senior international caps for Ecuador. Estrela Amadora will provide him with a fresh opportunity to build on that international recognition in a competitive European league.
Arévalo came through the youth ranks at Racing Santander, making his debut for the club's reserve side in 2022 before graduating to the first team and establishing himself as one of the Segunda División's most promising young forwards.
His rapid rise culminated in a senior call-up for Ecuador and a switch to the Bundesliga that was seen as a significant step up in his career, even if regular minutes have proven harder to come by since his arrival in Germany. A productive loan spell in Portugal now represents his best chance of getting his development back on track.