"The club and the striker have agreed on a deal until the end of the current season with an option to extend the contract for the next one," AC Milan confirmed on their official website on Friday.
The striker played for AC Milan in the two season 2010/11 and 2011/12 recording 85 appearances, 56 goals and significantly contributing to the achievement of the 18th Scudetto and the Italian Super Cup.
Ibrahimovic, who has been without a team since leaving the LA Galaxy at the end of the 2019 Major League Soccer season, will be joining a Milan squad that is struggling.
"I am returning to a club that I respect enormously and to a city that I love. I will fight with my teammates to change the course of this season and I will do everything to achieve our goals," Ibra said in comments posted on the AC Milan website.
Born in Malmo, Sweden, to immigrants from the former Yugoslavia, Ibrahimovic made his senior debut with hometown club Malmo Fotbollforening and quickly attracted notice from top European teams.
He then moved to play with AFC Ajax, Juventus FC, FC Internazionale, FC Barcelona, AC Milan, Paris Saint-Germain Football Club, Manchester United and Los Angeles Galaxy, recording a total of 788 appearances and 473 goals.
Among the various individual awards, Ibrahimovic has been top scorer five times (twice in Serie A) and has won 11 editions of the "Guldbollen", the prize given to the best Swedish footballer. In Serie A he has been named the League's best player three times and best foreign player five times.
Ibrahimovic is due to arrive in Milan on January 2 for a medical and will then join the squad for training, the club said.
( With inputs from IANS )