The 20-year old spent the second half of last term at Hibs and will now return to Easter Road and he is excited about returning to Edinburgh for the 2011/12 season.
"I enjoyed every minute of my time at the club last season," Towell told Hibernian's official website.
"I learned a huge amount during my last loan spell with Hibernian from playing regular first-team football; it really helped me develop as a player."
And Hibs boss Colin Calderwood was delighted to have the talented full-back again at his disposal.
"Richie is a talented young player and we were saddened to see him leave the football club at the end of last season," added Calderwood.
"So, to be able to bring him back is a real boost for Hibernian. He knows what we're all about, we know him and I'm sure he will hit the ground running."