Hummels left Dortmund for Bayern in 2016 having spent eight years at Signal-Iduna Park and establishing himself as one of the best centre-backs in world football.
He has continued to enjoy success in Bavaria, winning three Bundesliga titles, but will now return to Dortmund in a deal worth a reported €38 million (£33.8m/$42.5m).
The Germany defender picked up his fifth German title last season as Bayern recovered from a poor start to win the league by two points, edging out Dortmund.
The 30-year-old also won his second DFB Pokal as Bayern beat RB Leipzig 3-0 in the final, but it was far from a straightforward season for the central defender.
Hummels started just over half of Bayern's league games last season, losing his place in the starting line-up for several matches throughout the campaign after coming under fire for poor displays at the back.
He was also heavily criticised for his comments following the 3-2 loss against Dortmund in November, with the defender claiming he had blurred vision and felt sick in the build-up to the game. Hummels was later substituted in the second half.
During his first spell with Dortmund, Hummels helped Jurgen Klopp's side to back-to-back Bundesliga titles in 2010-11 and 2011-12 while also featuring in their 2013 Champions League loss to future club Bayern.
Head coach Lucien Favre has been much busier than Bayern manager Niko Kovac this month, and the signature of Hummels shows his intent on the aspirations of the club as they look to dethrone their fierce rivals once again.
Dortmund will add Hummels to their ever-growing list of incoming transfers this summer, having already brought in Julian Brandt, Thorgan Hazard and Nico Schulz.
Having been told by Germany coach Joachim Low earlier this year that he will not feature in any future plans regarding the national team, Hummels can certainly reclaim his spot as Borussia's first-choice centre-back next season.
The defender may find some hostility given his decision to join Bayern, but he certainly was not the first to make the switch, with Robert Lewandowski and Mario Gotze having also made the move in recent years.
Hummels, however, looks set to join Gotze and return to Borussia.