The Israeli international played for the Hammers between 2005 and 2007, and has since gone on to play for Liverpool, Chelsea and Arsenal. But the attacking midfielder spoke of his "delight" after sealing a late move to join up with Sam Allardyce's team.
"Thank you very much to everyone who has welcomed me back," he told the club's official website.
"I'm delighted to be here because I've been here before and this is a great club and I just cannot wait to start playing here again."
In Benayoun's first spell at the club, he appeared for the Hammers 72 times in all competitions scoring on eight occasions.
"I think the deal went through about one minute before the deadline! We had a long day because I had conversations with a lot of teams during the transfer window and a few of them made offers to me.
"West Ham actually came in during the last few hours of the transfer window and, when they did, we tried to seal the deal and I was delighted when we did it."
He added: "We have got a lot of quality in the team and a great manager, so it should be easy for me to fit in."
Benayoun is one of ten new additions to the West Ham squad, joining Andy Carroll, Matt Jarvis, Alou Diarra, Modibo Maiga, James Collins, George McCartney, Mohamed Diame, Jussi Jaaskelainen and Stephen Henderson in east London.