The 33-year-old, who began his professional career with the Belgian club in his home nation, returns to the First Division A side after an absence of 13 years, after he announced his exit from the Citizens.
"For the next three years, I will take up the role of Player-Manager of RSC Anderlecht," the defender wrote in an open letter to supporters. "Belgium’s finest.
"This may come as a surprise to you. It’s the most passionate yet rational decision I’ve ever made.
"As a footballer, I was born and raised at RSC Anderlecht. Since the age of 6, I have been one with that club. A history of 34 league titles, they are second to none."
The centre-back went on to explain how the decision to return to the side where he made his debut came around, explaining a meeting that he held with chairman and owner Marc Coucke after the latter took over from the Vanden Stock family in December 2017.
"I stopped at their training grounds on my way to international duty last year," Kompany added. "Coucke, the chairman, and Sports Director Michael Verschueren asked my opinion regarding the difficult situation the club was in.
"I shared my thoughts and listened to their vision for the future: ambitious, courageous and determined to get back to [number one]. I offered my help, no strings attached, should they need it.
"Later on in the season, newly appointed Technical Director Frank Arnesen joined and we organized some technical sessions on how to build a strong playing identity based on attractive, attacking football.
"RSCA has a tradition of having fantastic youth. You could say they have the past and the future, but struggle with the present.
"Not so long ago, I took a call from RSC Anderlecht. Quite unexpectedly, they offered me the position of Player-Manager. Michael and Frank explained to me in detail how they saw it working in practice. They had thought it through.
"Mr. Coucke, the owner, pledged full support: time, budget, framework, staff, facilities... I was left not only impressed, but also intrigued by this sign of confidence in me. It got me thinking."
Kompany went on to reiterate his gratitude to City and manager Pep Guardiola, adding: "The end of this season couldn’t be more memorable. I have lived the dream here.
"I have learned so much the last 3 years. From an incredible manager. Pep Guardiola reignited my love for the game. I’ve witnessed, participated, analyzed, absorbed, studied. Man City play the football I want to play. It is the football I want to teach and to see played."
"I have decided to take up the challenge at RSC Anderlecht. Player-Manager. I want to share my knowledge with the next purple generations. "With that, I will also put a bit of Manchester in the heart of Belgium.
"This is no goodbye. It’s a see you later. Et pour les Mauves, voor alle Anderlecht fans: tot binnenkort, a tres bientot. Love, Vincent."
Kompany departs City having won 10 major titles at the club and having helped them complete a first-ever English domestic treble in his last season.