Balogun left Rangers at the end of the 2021/2022 season following the expiration of his contract.
The 35-year-old won the Scottish Premiership and Scottish Cup during his previous two-year spell at Ibrox and collected a runners up medal from the 2022 Europa League final defeat to Eintracht Frankfurt.
An untimely ankle injury to young defender Leon King necessitated Rangers manager Michael Beale's need to reinforce at the back.
He is Rangers' seventh summer signing and after joining up with the team at their training camp in Germany, said: "I am just excited to be honest.
"It is still a bit unreal but it is very real, so I am just really really happy to be back at Rangers - it feels like coming home.
"Since I have left, I have always felt a lot of appreciation and love from friends I have made in Glasgow and around the club and now that I am back it is nice to say the least.
"I know second is no option, I know what people are going to say very quickly if we are not performing so it is time to get to work, put our best foot forward and make sure we get the results that we need."
Beale added: "Leon is a person that I have full trust in both as a footballer and a man.
"He is extremely well-liked by everyone inside the club, and we are very happy to have someone with his experience and leadership qualities re-joining our squad.
"Naturally he will integrate back into the club very quickly and he understands fully our way of working and style of play.
"As a free agent, we were able to move quickly so that he could join us here in Germany. It was really nice to see the reception he received from the players and staff on joining us here at the camp."
Balogun, who has won 46 caps for the Nigeria national team, counts Brighton and Hove Albion, Wigan Athletic, Mainz 05 and Werder Bremen among his former clubs.
