The Australian all-time leading goal scorer netted 52 times for Millwall in 217 matches between 1997 and 2004 before moving to Everton.
“The romance of the story is definitely not lost on me. I’ve always said that if I came back to England, I’d come home,” Cahill told millwallfc.co.uk.
“I can’t wait to greet the fans, meet my new teammates. It’s one of those things where it’s meant to be.
“Millwall is where I learnt my trade and it was the most important learning period of my life, my apprenticeship in understanding football.
“To come home to where it all started, it’s emotional, but it’s happy emotions, because you wish for it to happen, you want it to happen, but when it finally comes to fruition, it’s the perfect move.”
Millwall boss Neil Harriss, a former teammate of Cahill, was thrilled with the announcement.
“I’m naturally really pleased,” Harriss told millwallfc.co.uk.
“First and foremost, Tim comes with a wealth of experience. Not just in the footballing world, but for this football club. It might have been just over 13 years since he left, but this place doesn’t change.
“There’s still the same morals and principles and it’s a workman-like football club. Tim has been around the world playing, but his attitude, his discipline and his lifestyle hasn’t changed one bit. In so many ways, he is still the kid I used to share a dressing room with years ago.
“The players will thrive off the enthusiasm that he brings. When I played with him, I appreciated what he did. Since then, I’ve followed his career and admired what he has done and I know full well what he can bring to my dressing room.
“He is a different player to what he was years ago – he plays a little higher up the park now. At 38, he is in terrific shape. To start with, we are thinking about impact – someone to come off of the bench and give us that little lift, someone to lift the crowd and someone to pass on that knowledge when in front or behind.”
The 38-year-old will hope to impress new Socceroos coach Bert Van Marwijk and secure a place in the Australian World Cup squad.