The Scotland international has moved back to his boyhood club until the end of the season after only making a handful of appearances in his short spell at the Stadium of Light
The Scotland international has only made 14 Premier League appearances for Birmingham City, Everton and Sunderland since suffering cruciate ligament damage during his time at St Andrews in the 2010-11 season.
Black Cats' boss Martin O'Neill had been keen to keep the Scotland international at the Stadium of Light until the end of the season but having made only three substitute apperances for the club so far this season, the 29-year-old has chosen to return north of the border to the club where he started his career.
"I am really pleased to be back here at Motherwell," McFadden told reporters.
"I need to get back playing competitive first-team football and this is the best place for me. The team are flying high near the top of the table, but I hope I can add something to that over the next few months."
After departing Motherwell, who currently lie second in the SPL table behind runaway leaders Celtic, in 2003, McFadden enjoyed five productive years at Everton before making a £5 million move to Birmingham, where he helped the club achieve promotion back to the Premier League in 2009.
The forward has also made 48 appearances for the Scottish national side, the last of which came in 2010, and almost led the Tartan Army to the European Championships in 2008 with a series of match-winning performances, most famously scoring the only goal in Scotland's 1-0 victory over France in Paris in 2007.