The 28-year-old player becomes the Citizens' second signing of the January transfer window. The club recently acquired the services of Kermit Erasmus from Portuguese side Vitoria Setubal.
Mokeke was previously on the books of Premier Soccer League's side Chippa United.
The left-back had joined the Chilli Boys as a free agent in September 2018 - reuniting with his former coach at SuperSport and City, Eric Tinkler.
Tinkler was fired by Chippa at the beginning of last month and Mokeke has since left the Eastern Cape-based outfit.
Mokeke is returning to City having left the reigning MTN8 Cup champions at the end of the 2016/17 campaign. At the time, he was on loan from Matsatsantsa.
Mokeke was part of City's side which stunned SuperSport in the 2016 Telkom Knockout Cup final at the Peter Mokaba Stadium.
The Citizens, who are now under the guidance of Benni McCarthy, have since decided to re-sign Mokeke ahead of the second round of the current season.
The club announced the signing of the player on Friday.
"Cape Town City is delighted to announce the signing of South African, Thato Mokeke on a 2-year deal," a statement reads.
"The utility midfielder was an integral part of City’s 2016 Cup winning squad, and the club is delighted to have finally secured Thato on a permanent basis," said the statement.