The 33-year-old was released by QPR at the end of last season and has penned a short-term contract until January with the club he originally joined in 2002.
Johnson scored 85 goals in 160 games in his initial spell at Selhurst Park before leaving for Everton, and will bolster Neil Warnock's attacking options alongside Marouane Chamakh, Fraizer Campbell and Dwight Gayle.
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"I am delighted to be coming back to a club that I love and have a real soft spot for,” Johnson told the club’s official website. “I would like to thank the gaffer and the chairman for giving me this opportunity and I am looking forward to helping this football club have continued success in the Premier League.
“I have also been given an opportunity to help the youngsters in a coaching capacity, something I am really looking forward to getting involved in.”
Johnson, who has earned eight England caps, will also coach the club's academy players during his second spell at Palace.