The much-travelled Morata, who is 27, played for Juventus from 2014-2016, scoring 27 goals in 93 appearances.
He graduated through the youth system at Real Madrid and had two stints at the club either side of his first spell at Juventus. He also had a spell at Chelsea before joining Atletico, initially on loan
He has joined Juventus on a season-long loan, which will cost 10 million euros (11.7 million dollars), the club said.
"He will be part of this year's team, with an option for a one-year extension to the loan, plus an option to buy," said Juventus on their web site, adding that the transfer fee would be 45 million euros, in three annual payments of 15 million euros, while a loan extension would cost 10 million euros at the end of which Juventus would have another option to buy, for 35 million euros.
"There's nothing more exciting than a homecoming and the return of Alvaro Morata to Turin is a beautiful one at that!" said Juventus.
After Gonzalo Higuain left for Miami last week, Juve's new coach, Andrea Pirlo, needed a solid centre-forward. The club was linked to Barcelona's Luis Suarez and Roma's Edin Dzeko but Morata, who played with Pirlo in his first spell at club, has arrived instead.
Spanish media immediately speculated that Morata's departure could clear the way for Atletico to recruit Suarez.
Morata scored in both legs in the 2015 Champions League semi-finals as Juventus beat one of his former clubs, Real Madrid, 3-2 on aggregate.
He then scored a second-half equaliser in the final before goals by Suarez and Neymar gave Barcelona a 3-1 victory.
His last goal for Juventus was the winner in the 2016 Copa Italia final against AC Milan, when he came off the bench 18 minutes into extra time and scored two minutes later.
"Even though Alvaro left the club four years ago, after having won five trophies in two years: two Scudetti, two Italian Cups, one Italian Super Cup, he has always remained Bianconero in his heart and his return will be as though he never even said goodbye.
"Because Alvaro is one of us," said Juventus.
