The 27-year-old defender came through Schalke's youth system in 2011 before completing a transfer to Arsenal in 2017.
After three years in north London, the Bosnia and Herzegovina star is returning to Germany for six months and will then consider his future at the end of the season.
Upon rejoining Schalke ahead of the January transfer window, Kolasinac said: “I'm happy and proud to be wearing the royal blue of Schalke 04 once again.
“The club is currently in a difficult situation. Over the coming weeks and months I want to do my part in order to help us pick up as many points as possible.
“We will manage to stay up together, I'm 100 per cent convinced of it!
“I'm also very happy to be reunited with several familiar faces, both in the team and backroom staff. I never lost touch with FC Schalke 04.
“Returning to Gelsenkirchen was something I really wanted to do."