Kongolo joined Ligue 1 outfit Monaco on a five-year contract ahead of the 2017-18 season but he only made three appearances before he was loaned to Huddersfield.
And the 24-year-old – who can play centre-back and left-back – impressed David Wagner and Huddersfield during the final five months of the Premier League campaign, amassing 17 appearances as the Terriers avoided relegation.
Kongolo told the club: "I have a good feeling, I think it was two months ago since I was last here. I have a good feeling, I've signed for the club and I'm happy to move forward.
"The Premier League is one of the best competitions in the world. I learnt a lot off the coach, the team was good, and we stayed in the Premier League!
"It was 2015 my last game for the Netherland and Ronald Koeman told me it's important to play games so you can grow. I played games at Huddersfield and they saw I did well so that's why they've involved me now."
"I'm so happy that we've brought Terence back as a permanent Huddersfield Town player ahead of the 2018/19 Premier League season. His signing is a big statement for this club," Wagner added.
HE'S BACK! #htafc has completed the permanent signing of defender @KongoloTerence from @AS_Monaco on a four-year contract for an undisclosed fee!— Huddersfield Town (@htafcdotcom) June 8, 2018
Terence is sporting the new @UmbroUK home kit for the 2018/19 @premierleague season.
https://t.co/G5sFimzbNz (CL) pic.twitter.com/Ogc8yhTIGS
"We knew he was a top, top player when we brought him in on loan in January; you don't play for the Netherlands in a World Cup and win the Dutch league with Feyenoord otherwise. However, his performances in our shirt exceeded our expectations."
Huddersfield finished 16th in the Premier League this season, having shipped 58 goals along the way.
The signing of Kongolo, along with former Leicester goalkeeper Ben Hamer who signed on a free earlier in the summer, should help the club's depth along the back-line heading into the new season.