Flood joined the Tessiders in January 2010 from Celtic but has decided to leave the club and return to Tannadice Park where has already played more than 50 league games.
Tangerines boss Peter Houston admitted that the was delighted to sign the former Manchester City man.
"I am thoroughly delighted to have secured Willo," Houston told the club's official website.
"We know all about his qualities from his previous spell here and as I look to add experience to the team, I see him as an excellent and important addition.
"We knew we had to add experience to the squad and with this acquisition, we have again ticked all the boxes I was looking for in a new signing.
"It says everything about Willo that he has chosen to come to Dundee United.
"He had more lucrative offers available but not only has he enjoyed his football here previously, he sees Tannadice as a place where he can enhance his career.
"He also has the opportunity to experience European football next season and that is something not all clubs could have offered him.
"This signing is very much a coup for the club and I know the fans will be excited at the prospect of seeing Willo in a United shirt once more."