The 38 year-old completed his medical at the Lions on Tuesday morning, the club announcing his return, 13 years after leaving the club to embark on a decorated club career, highlighted by stints at Everton, New York Red Bulls, Shanghai Shenhua and most recently, Melbourne City in the A-League.
Cahill's glittering career began at Millwall, where he scored 57 goals in 251 appearances between 1998 - 2004. Arguably his most significant contribution was a starring role in the Lions' run to the 2004 FA Cup final - a 3-0 loss to Manchester United - in a team that included Denis Wise and future A-league rival Paul Ifill.
Cahill departed Melbourne City in December amid reports he fell out with coach Warren Joyce.
A statement from Cahill read of the split: "Playing in the domestic league in Australia was always an important career goal for me, and my experience here has been fulfilling from start to finish,.
"The welcome from fans, the quality of the facilities and the ever-increasing quality of football continues to be a source of immense pride.
"I want to thank Melbourne City, the players and the staff, and especially the fans."
Both New York City FC and Millwall were among the clubs rumoured to be in talks with Cahill as the player sought match fitness leading into the 2018 FIFA World Cup in Russia. The Championship team firmed as favourite, before finally announcing the deal on Tuesday morning (AEDT).