Gough, 36, made his debut for Tykes (Yorkshire) in 1989 but moved from Headingley to Essex in 2004.
It is a move which could reinvigorate the veteran's career after his omission from the England World Cup squad appeared to signal the end of his international ambitions.
Gough admitted he never thought a return to his home county was likely.
"I thought today would never happen," he said.
"Today is a very proud day, to come back as captain. There are some exciting things happening at this club. I am just looking forward to the challenge.
"With the blend we have got I think we have a good chance this year of putting in some good performances."
He added: "I'm here to bring my experience and enthusiasm. By the time I leave here hopefully we will have the structure in place to keep winning trophies, like we used to do years ago."
Gough's international career came to an end when he failed to make England's squad for the World Cup in the West Indies.
He retired from Test cricket in 2003 after taking 229 wickets in 58 appearances.
In 159 one-day internationals, he has 235 wickets, a national record.
Gough admitted he was disappointed to miss out on England's World Cup squad but insisted "never say never" when it came to the possibility of resurrecting his international career with his performances for Yorkshire.
"I was told I was just about there but obviously when England win their three or four last matches, you miss out," he said.
"I'm 36 years old, I can still bat and bowl. I can still do a job. I wish I was there but I wish England well. You never say never. My job is now with Yorkshire."
Yorkshire chairman Colin Graves said it was an easy decision to bring Gough back to the county when it became clear he was available.
"There was nobody more disappointed than me when Darren had to leave," he said.
"So when the opportunity arose to bring him back to Yorkshire I took it with both hands.
"One thing Darren put across to me when I first met him six or seven weeks ago was that he thought he had unfinished business at Yorkshire.
"The board were unanimous (in wanting to bring Gough back)."
He added: "It is a fantastic day for Yorkshire County Cricket Club and I look forward to him bringing all his knowledge to bring us back where we should be."